Preliminary Stages of the Decision
The potential sale of ComeOn is currently in its nascent stages, with no guarantees yet in place. However, the online gambling operator’s value is projected to be between 8 to 9 times its anticipated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This valuation indicates a healthy interest in ComeOn, although representatives from Cherry, Bridgepoint, and ComeOn have not yet made any official statements regarding the sale.
If the sale does proceed, it would mark a significant strategic shift for Cherry. The company originally acquired 100% of ComeOn’s shares for €280 million back in 2017. Since then, ComeOn has expanded its portfolio to include 15 online casino and sports betting brands across Europe, such as Getlucky and Mobilebet. This growth has positioned ComeOn as a notable player in the online gambling landscape, making its potential sale a topic of considerable interest.
Market Challenges
Despite Cherry’s growth and increased market reach since the acquisition, the company has faced several challenges that may have prompted the consideration of a sale. One of the most significant hurdles has been regulatory changes in Sweden, one of Cherry’s primary markets. In 2019, new regulations were enacted that limited the operator’s business operations, creating a more challenging environment for growth.
Additionally, Cherry has encountered tightened restrictions in Germany, which have adversely affected its online performance. These regulatory hurdles have not only impacted revenue but have also complicated the operational landscape for Cherry and its subsidiaries.
Moreover, Cherry has struggled to divest other subsidiaries, which has added to its challenges. For example, the company attempted to sell Yggdrasil, a game developer within its portfolio, but the offers received were below expectations. The potential sale of ComeOn could allow Cherry to streamline its operations by divesting its consumer-focused segments and pivoting towards its more successful B2B services, which have shown greater promise in the current market.
Potential Market Interest
While the sale of ComeOn remains uncertain, it is anticipated that an auction will take place later this year. The interest in ComeOn is likely to come from European-based private equity firms and gambling operators eager to enhance their foothold in regulated markets. Given ComeOn’s significant market share in Sweden and its recent acquisition of a Dutch online gambling license in 2022, it stands out as an attractive candidate for potential buyers.
The European gambling market is increasingly competitive, and operators are constantly seeking ways to expand their reach and improve their offerings. ComeOn’s established presence in key markets, coupled with its diverse portfolio of brands, makes it a valuable asset for any firm looking to strengthen its position in the online gambling sector.
As the potential sale unfolds, the dynamics of the market will be closely watched by industry insiders and investors alike. The outcome could have far-reaching implications not only for Cherry and ComeOn but also for the broader landscape of online gambling in Europe.