888 divests Latvian assets, Paf steps in

888 has announced an exit from the Latvian market with the company selling its local business units to Paf Consulting Abp. The company has announced the sum of the transaction at €28.25 million, of which €24 million will be part of an initial consideration paid in cash upon completion of the transaction. An additional €4.25 million will be payable in 2024 following the completion of the 2023 financial audit.

Paf is buying out the business assets on a cash-free debt-free basis, which will allow it to acquire 100% of the business. This divestment should have no significant bearing on 888, as the Latvian business operates largely as an independent entity, the Group informed in a press release published on its website.

A temporary license will be granted for the operation of the William Hill and Mr Green brands as well. The statement also provided an updated snippet of the Latvian business’ financial performance in 2022. 888 said that net revenue stood at £9.1 million with EBITDA hitting £2.5 million.

Before the transactions may be completed, certain milestones and prerequisites need to be first accomplished. Amongst them is the separation of the Latvian subsidiary from the Group’s supplier contracts, and the successful incorporation of the business into Paf’s own contracts. There are also changes in control consents and payment of dividends, that 888 expects to complete in the coming weeks.

Commenting on the latest development, 888 Executive Chair Lord Mendelsohn said that this deal was largely in line with 888’s broader ambition to focus on core assets. 888 is now interested in focusing on assets that would generate long-term value for shareholders.

"The Latvian business is a high-quality, locally regulated business, with an excellent team that has built a strong market position. I would like to express my sincere thanks to the team for their dedication during their time with the Group and I am highly confident that under new ownership with Paf, the business will continue to flourish," Mendelsohn said passing on the baton.

Paf CEO Christer Fahlstedt was similarly pleased with this opportunity and he welcomed 888 for trusting the future of the Latvian assets with his company. Fahlstedt said that his company was intent on continuing what he described as a "success story" in the region.

Paf also welcomed the opportunity to strengthen its pole position in a market which has been so heavily focused on player protection, something that the company itself has championed extensively.

The business that Paf inherits was originally launched in 2012 when the company operated as 11.lv locally. 888 has been looking to indeed reposition its focus on higher-value assets that better align with its strategy.

Although Q1 revenue contracted, 888 assured that it has overcome the brunt of Middle East regulatory concerns and the record settlement reached with the UKGC that saw the company pay £19.2m. The appointment of Ben Hurst as VP of NA Expansion is a clear signal that 888 is increasingly having its sights on the North American market.

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