(Reuters) Buyout group Centerbridge has joined up with Deutsche Telekom to bid for Tipico as an auction of Germany’s largest private sports betting group nears an end, two people familiar with the matter said.
Deutsche Telecom aims to take a minority stake in privately-held Tipico — a sponsor of soccer clubs like FC Bayern or Hamburg’s HSV — as it seeks to expand revenue outside its traditional business, the sources told Reuters.
Centerbridge would buy the majority of Tipico, which is being sold by its founders, they said.
The planned offer may value Tipico at about 1 billion euros ($1.1 billion), or roughly 9 times its expected core earnings, in line with the valuation of listed peers like GVC (GVC.L), one of the people said.
Last year, Tipico posted earnings before interest, taxes, depreciation, and amortization of about 110 million euros, the sources said.
Deutsche Telekom, Centerbridge, Tipico and its owners declined to comment.
Betting has been a part of Deutsche Telekom’s strategy for some time. It owns a 64-percent stake in Deutsche Sportwetten GmbH, the owner of Austria’s sport betting group Tipp3, which launched a service for Germany last year.
At the time, Deutsche Telekom said it expected the sports betting market to grow, with an estimated German market volume of about 5 billion euros. The depth of potential post-deal cooperation between Tipico and Tipp3 is unclear, but could get a boost if Deutsche Telekom acquired rights to stream some German top-flight Bundesliga soccer matches on the Internet.
“Live feeds are essential for any sports betting group,” a person familiar with the matter said, adding Tipico could become less dependent on pay-TV operator Sky if Deutsche Telekom acquired it and won some Bundesliga rights.
Deutsche Telekom also holds rights to show other sports like basketball and ice hockey on the Internet.
Final bids for Tipico, whose owners are being advised by Rothschild and JP Morgan, are due at the end of next week.
Private equity group CVC is also expected to hand in a competitive offer, the sources said.
“CVC could reap synergies by combining Tipico with online betting group Sky Bet, which it bought in late 2014, and may therefore be able to make the highest offer,” one of the people said. Sky still holds a 20 percent stake in Sky Bet.
XIO Group, a China-based buyout firm, is also expected to bid, while Czech lottery firm Sazka, which is owned by investors Emma Capital and KKCG, is unlikely to present a high offer, two other sources said.
Sazka’s appetite for deals had waned since its recent investment in Casinos Austria and a joint bid with Austria’s Novomatic for a lottery concession in Italy, one source said.
All of the potential bidders declined to comment, except for Xio, which was not immediately available.
(By Arno Schuetze; Additional reporting by Harro Ten Wolde and Jan Lopatka; Editing by Maria Sheahan and Alexander Smith)