Cherry AB Explores Sale of ComeOn Group: A Strategic Shift in the Gaming Landscape
Swedish gaming operator Cherry AB is reportedly considering the sale of its online casino and sports betting subsidiary, ComeOn Group. This potential divestiture marks a significant strategic shift for Cherry, which is currently owned by private equity firm Bridgepoint. The company is working closely with financial advisors from Moelis and Jefferies to assess the best path forward for its Malta-based subsidiary. Insiders suggest that the sale could value ComeOn at approximately €500 million, based on projected earnings for 2025, as reported by Reuters.
A Broader Trend in the European Gambling Sector
Cherry’s contemplation of a sale aligns with a growing trend among European gambling operators. Many are offloading consumer-facing assets to refocus on business-to-business (B2B) services and software development. This strategic pivot mirrors actions taken by other industry players, such as Playtech, which sold its Italian gaming division, Snaitech, to Flutter Entertainment for a staggering €2.3 billion in 2023. As the gaming landscape evolves, operators are increasingly prioritizing B2B capabilities to enhance profitability and sustainability.
Early Stages of Sale Discussion
It is important to note that the discussions surrounding the sale of ComeOn are still in their infancy. While the potential sale is being evaluated, no definitive agreement has been reached. Analysts estimate ComeOn’s value at eight to nine times its expected EBITDA of €60 million in 2025. Cherry AB has remained tight-lipped about the sale, with representatives from ComeOn, Bridgepoint, and their advisors also refraining from commenting on the matter.
ComeOn’s Growth and Market Presence
Cherry AB acquired ComeOn in 2017, purchasing 100% of its shares for €280 million. Since that time, ComeOn has expanded significantly, managing 15 different online casino brands, including Mobilebet, Getlucky, and its flagship ComeOn brand. The company serves a diverse range of markets across Europe and employs over 550 individuals. This growth trajectory has positioned ComeOn as a notable player in the online gaming sector, making it an appealing asset for potential buyers.
Navigating Regulatory Challenges
The decision to explore a sale is influenced by the regulatory challenges that Cherry has faced in key markets. The Swedish market, one of Cherry’s primary regions, implemented regulatory changes in 2019 that adversely affected business performance. Additionally, increased restrictions in the German market have further strained the group’s online operations. Sources indicate that Bridgepoint is eager to divest ComeOn, with one insider remarking, “It must be killing Bridgepoint to keep owning it.” These challenges underscore the complexities of operating in a heavily regulated industry.
Previous Sale Attempts and Strategic Restructuring
Cherry AB has encountered difficulties in its previous attempts to sell other parts of its portfolio. The company reportedly sought buyers for its game development subsidiary, Yggdrasil, but did not receive offers that met its expectations. With the proposed sale of ComeOn, Cherry appears to be restructuring its focus, moving away from consumer brands and toward its more successful B2B ventures. This strategic realignment reflects a broader industry trend as companies adapt to changing market dynamics.
Potential Buyers and Market Interest
Should the sale of ComeOn proceed, a variety of potential bidders could emerge, including European gambling operators and private equity firms with stakes in the online gaming sector. ComeOn’s strong presence in markets like Sweden, coupled with its recent licensing to enter the Dutch online gambling space in 2022, enhances its attractiveness as an acquisition target. Buyers looking to expand or solidify their positions in regulated markets may find ComeOn’s portfolio particularly appealing.
Looking Ahead: Auction Possibilities
While the final outcome of the sale remains uncertain, an auction could take place later this year. Bridgepoint is likely eager to capitalize on ComeOn’s continued growth in the online casino and sports betting sectors. Despite the uncertainties surrounding the sale, ComeOn’s financial outlook remains robust, positioning it as a valuable player in the broader European gaming landscape. As the gaming industry continues to evolve, the potential sale of ComeOn could have significant implications for both Cherry AB and the wider market.