Lottoland disgruntled by Zeal’s Lotto24 snub

Lottoland, Zeal, Lotto24, snub
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Zeal shareholders narrowly voted in favour of reclaiming former subsidiary, Lotto24 – simultaneously spurning a E76m takeover bid for their own assets, from rival operator Lottoland.

Ending a complicated saga that has dragged on since the new year, Zeal Network’s shareholders have approved their board’s plans to acquire digital lottery broker, Lotto24 – thereby snuffing out the plans of rival operator, Lottoland.
Sixty percent of Zeal shareholders voted in favour of proposals reacquire Lotto24, its former subsidiary that was spun off into a standalone entity in 2012. Germany’s com- petition regulator has already approved the deal.
However the deal was heavily criticised by Lottoland, which owns 5.5 percent of Zeal.
Lottoland had tried to scupper the deal by offering Zeal shareholders a counter offer of E76m, in exchange for another Zeal subsidiary, Tipp24, which generates most of Zeal’s revenues. Lottoland was also interested in Tipp24’s customer base, intellectual property and infrastructure assets, as well as the UK Tipp24 services branch.
Zeal CEO Helmut Becker was quick to reject the offer saying Lottoland was attempting to buy Tipp24 “on the cheap” and “would strip Zeal of its most valuable asset and the basis for future brokerage growth in Germany, while leaving Zeal and its shareholders with considerable downside risks.”
In Germany lottery tickets are officially sold by the state, or through authorized distributors locally or online. But several “secondary” lotteries such as Tipp24, allow punters to bet on lottery results.
The sector is currently unregulated, but after the German authorities announced plans to tighten oversight of this secondary sector, Lottoland said that a divestment of Zeal’s lottery betting business would reduce “operational, tax and regulatory risks.”
It urged Zeal to postpone its shareholder vote on the Lotto24 acquisition, giving them time to consider its offer. Yet this was ultimately ignored and shareholders voted for Lotto24, and so against Lottoland.
Lottland’s Nigel Birrell has since released a statement arguing that Zeal did not secure a sufficient mandate to acquire Lotto24. And that, had Lotto24 shareholders not had a vote, this resolution would not have passed.
“This highlights what we have expressed all along – the Lotto24 shareholders are the only ones that will benefit from this transaction; and that the transaction is value destroying for Zeal shareholders,” he said.
However, Birrell said he could now move on from the dispute and look towards other M&A opportunities.
According to Reuters, Zeal said it plans to change the business model of Tipp24, to no longer bet on secondary lottery markets but become a legal distributor of official state lottery tickets.


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