Allwyn’s total enterprise value in the proposed transaction is expected to be approximately $9.3 billion; Transaction offers CRHC shareholders a rebate on the value of the company
Allwyn Entertainment, the new group brand for SAZKA Entertainment AG (“Allwyn Entertainment” or “Allwyn” or the “Company”), a leading multinational lottery operator, today announced another significant milestone in its evolution into a global lottery-focused entertainment platform: Allwyn’s intention to become a listed company on the New York Stock Exchange (NYSE) in partnership with Cohn Robbins Holdings Corp. (CRHC), listed on the New York Stock Exchange, resulting in a total projected enterprise value for Allwyn of approximately $9.3 billion. As described below and subject to certain restrictions, an innovative feature of the transaction provides CRHC shareholders with the ability to establish equity stakes at a maximum enterprise value of approximately $8.7 billion. The CRHC is co-chaired by its co-founders, Gary D. Cohn and Clifton S. Robbins.
Karel Komárek, chairman of the board of Allwyn and founder of KKCG Investment Group, majority owner of Allwyn, declared, “Listing on the New York Stock Exchange is the next chapter in Allwyn’s story and its shared track record of success for the benefit of stakeholders, communities, governments and investors. We expect the business to generate attractive revenue, earnings and cash flow growth, creating attractive long-term value for investors. The IPO allows Allwyn to expand its shared success to more markets, while improving access to capital to fund accelerated growth opportunities. KKCG has known for years that Allwyn is an incredible company, and I’m very proud that global investors have the opportunity to participate in its future growth..“
Robert Chvatal, Chairman and CEO of Allwyn, stated, “The time has come for Allwyn to take this exciting step. Jurisdictions in Europe and North America should have higher expectations for the innovations their lotteries can bring. As consumers expect the ability to experience and pay for entertainment online, Allwyn is building stronger, more individualized and more valuable relationships with its customers. We look forward to applying our experience in developing market-specific and culturally appropriate lottery entertainment to new customers and geographies as a NYSE-listed company..”
A leader in the large-scale, resilient and growing lottery industry
the $300 billion global lottery industry is the largest constituent of the global gaming ecosystem by sales and wagering, with customer demographics and market dynamics characterized by high global participation; resilience to market cycles; and the expected acceleration of growth due to digitization and the trend of increasing online sales.
With a track record of robust organic growth complemented by value-added acquisitions, Allwyn’s management team has built a platform whose component businesses (on a 100% basis) have collected approximately €16 billion in bets on the 12 month period ending June 30, 2021. A leading multinational lottery operator, Allwyn operates lotteries in Austria, Czech Republic, Greece, Cyprus and Italy, and forecasts approximately $810 million (€710 million) in adjusted EBITDA on approximately $1.7 billion (€1.5 billion) in net gaming revenue in 2022. Pro forma net debt / 2022E adjusted EBITDA should be around 1.6x.
Allwyn is committed to the highest standards of player protection, with all lottery businesses operated by Allwyn currently certified for Responsible Gaming by European Lotteries and holding the highest level of Responsible Gaming Certification (Level 4) of the World Lottery Association.
NYSE listing and capital investment to support growth strategy
Allwyn expects the NYSE listing to support its global growth strategy by:
- Provide the Company with greater access to capital markets to complement its strong balance sheet and cash flow generation, enabling it to accelerate its successful organic and inorganic growth strategy;
- Improve and expand its global brand, including in the very attractive markets of the United States; and
- Building on its reputation for transparency as a long-time issuer of publicly traded bonds with the added distinctions of being an SEC-regulated company listed on the world’s premier stock exchange.
Trends in developed country lottery, gambling and sports betting markets indicate the potential for significant additional online penetration in the markets where Allwyn operates, as well as those it has targeted for expansion . In markets where online lottery has been introduced, the total market size and the retail lottery market have increased significantly.
Allwyn Online Users business has more than doubled over the past two years, allowing the Company to build relationships with its customers and implement cross-selling initiatives that it believes will create more value and benefit from lower sales rates churn and low customer acquisition costs.
The Company has also identified new market opportunities in Europe and the United States, through potential acquisitions and license tenders, in markets that represent approximately €129 billion in lottery bets estimated for 2022.
Messrs. Gary D. Cohn and Clifton S. Robbins, co-founders and co-presidents of Cohn Robbins Holdings Corp., declared, “We’ve worked with hundreds of management teams and invested in hundreds of companies over our careers, but we founded Cohn Robbins to seek out just one. We believe Allwyn is the right company, in the right industry, at the right time and with the right management team. We are excited about the growth opportunities ahead of the Company and look forward to providing our support. We are also very pleased to bring this transaction to Cohn Robbins shareholders in an innovative way and at an attractive valuation..”
A valuable and responsible community partner
Following more than $100 billion, or about one-third of annual global lottery sales, has moved toward funding public programming in recent years, according to data collected from their members by the World Lottery Association and European Lotteries. Allwyn uses its platform and skills to benefit the communities it serves.
Since 2014, Allwyn’s provided major support for the renovation and modernization of the most important, largest and oldest children’s hospitals in Greece. The company promotes active lifestyles as a major sponsor of professional and grassroots sport, including Olympic teams, professional soccer and basketball teams, and after-school programs and activities for children. It is the largest sports supporter in Austria, together with its subsidiary, Austrian Lotteries, which makes a guaranteed annual contribution of at least €80 million to sport and has provided around €1.7 billion in sports funding since 1986. In the Czech Republic, 150,000 school children each year participate in a company-sponsored Olympic-style multi-sport competition, and the company helps more than 3,200 underprivileged children to play sports through the Foundation Czech Olympics. In Greece, Allwyn sponsors over 175 sports academies serving over 18,000 children, 28,000 parents and guardians and 1,000 coaches.
Overview of transactions
Current Allwyn shareholders are expected to retain an approximate 83% stake in the company, and no new shareholder of the Company will hold a stake of more than 5% immediately after the transaction.
Allwyn’s expected pro forma implied total enterprise value of approximately $9.3 billion represents approximately 11.5x 2022E adjusted EBITDA. However, due to a bonus pool of up to approximately 6.6 million CRHC shares to be made available exclusively to non-redeeming CRHC shareholders, such shareholders have the ability to establish holdings at a multiple expected maximum effective valuation of 10.8x 2022E Adjusted EBITDA, or approximately $8.7 billion in total enterprise value. Free shares lost by shareholders who have requested redemption will be distributed to shareholders who have not requested redemption on a pro rata basis, variable according to a range of exchange parities of shares held by shareholders who have granted redemption rights between 1.08x and 1 .40x, to be determined based on redemptions. Assuming a price of $10.00 per CRHC common share at the closing of the transaction, non-redeemable CRHC shareholders would receive, in exchange for each CRHC common share held, shares of the post-combination company of a value equivalent to $10.80 (assuming no redemptions by CRHC shareholders) and $14.00 (assuming redemptions result in the maximum exchange ratio).
CRHC, a special purpose acquisition company, holds approximately $828 million in cash in trust. Concurrent with the completion of the proposed transaction, investors have agreed to purchase over $350 million of securities of the combined company (the “PIPE Investment”). The PIPE investment includes participation from a group of international investors, including $50 million from the sponsoring entity of the CRHC.
The proposed transaction, which has been unanimously approved by the Allwyn Board of Directors and the CRHC Board of Directors, is expected to close in the second quarter of 2022, subject to CRHC shareholder approval, gaming regulatory approvals and other customary closing deals. conditions.
Upon closing, Mr. Robbins will join Allwyn’s board of directors and Mr. Cohn will serve as special advisor to the chairman of the Allwyn board of directors.
PJT Partners is acting as financial advisor to Allwyn and KKCG, and is acting as joint placement agent on the PIPE. Kirkland & Ellis LLP and Clifford Chance are legal advisors to Allwyn and KKCG.
Citi is acting as financial advisor to the CRHC and joint placement agent on the PIPE. Credit Suisse acts as Equity Capital Markets Advisor to the CRHC. Skadden, Arps, Slate, Meagher & Flom LLP is legal counsel to the HRCC.
Winston & Strawn LLP is acting as legal counsel to the Placement Agents.