FTSE 100 sports betting and gaming group Entain was the winner in this year’s Corporate Finance category, with its voluntary tender offer to acquire Polish gambling business STS for PLN 3.9bn. In this complex deal, Entain’s treasury team overcame a variety of challenges, from negotiating terms on a bank guarantee to executing a successful FX management strategy.
Entain CEE was established in 2022 as a 75/25 venture between Entain and Emma Capital in order to make acquisitions in the CEE region.
For the STS acquisition, Entain opted to fund its share of the financing required through an equity placing led by the company’s Investor Relations team. However, because of Polish takeover rules, the company needed to provide a bank guarantee for 100% of the tender offer value. As such, the company needed to negotiate keenly to find a financing package that would avoid the need to pay fees for both the placing and the guarantee.
At the same time, the treasury team needed to work with four groups of stakeholders with very different requirements in order to develop and explain the company’s financing and FX risk management strategy. Particularly challenging were the FX mismatches between the three sources of funding and the end payment to STS’ shareholders in PLN.
Obtaining the bank guarantee was a process that involved two parallel negotiations: the first to find a bank that could provide the guarantee in line with the needs of Entain’s secured financing structure, and the second to ensure that Emma Capital was content with the deal obtained. With a successful approach to both negotiations, Entain’s treasury team was able to secure a bank guarantee from Santander for PLN 3.9bn on attractive economic terms.
The treasury team also addressed the FX risk arising from mismatches between the different sources of funding and the end payment to STS’ shareholders. This was achieved using a PLN 1.4bn deal-contingent forward contract, alongside a natural hedge and additional swaps/forwards.
There was plenty to applaud in Entain’s corporate finance deal, from navigating the complexity of mixed source of funds to managing multiple stakeholders.