NYX Gaming Group Chief Executive Matt Davey provided Gambling Insider with insight into his firm's Â£270m acquisition of fellow supplier OpenBet
What's your reaction to your OpenBet acquisition?
We couldn't be happier. The industry recognises that this is a natural fit between two great businesses with complementary product sets, a complementary approach to business as open architecture driven companies, and a great cultural fit between the management teams. We couldn't be more excited. This is definitely the next phase of growth in the business. There's lots of hard work in front of us but we have all the pieces together now.
Why do you see the two businesses as being so complementary?
From NYX's perspective, we've built out a diversified gaming supply business over the last decade or so but we're focused on the bingo, casino and lottery markets in particular. We've got market-leading products in those segments, but what we've never tried to do, simply because we appreciate how difficult it is, is get into the sports-betting business. OpenBet in the same fashion has built a really strong position in sports betting, and to be fair they've also got casino and a platform business, but you couldn't get a better fit than the complementary nature of their product set with our product set.
The purchase price will be financed partly through Â£125m of senior secured credit facilities. How much of a challenge was it to gain such a significant amount?
That was actually one of the easier negotiations because it was an existing lender. They already knew the business and were already extremely comfortable with the financial performance. We looked at about half a dozen offers, and when they tabled theirs we thought it was very attractive and certainly met our needs of the kind of terms we were looking for.
What are your initial plans for OpenBet? Can we expect any immediate changes to the company?
No â€“ it's definitely business as usual. The really great thing about this transaction is that we're not buying a broken business â€“ we're buying a fantastically well-performing business with a great management team and a great set of customers. The real focus is how we make the most of this â€“ how do we get product synergies and the benefits of the scale that the combined business can bring? From day one you'll see business as usual â€“ Jeremy [Thompson-Hill, OpenBet CEO] is running the company, he's done a great job there and we'll be looking at getting best-of-breed processes and products right across the group.
How do you intend to grow and develop OpenBet in the longer-term?
The private equity owners are obviously good owners but they take a different view when it comes to long-term product development. In a stable, public company we can take a long-term view as to where we see the products moving. We intend to invest more in the back office platform, marketing tools etc, and we'll also look to integrate the product sets from our more developed casino product set and their heavily developed sports-betting product set, so we can offer a much more powerful portfolio of products to our customers. You'll see that over the next two to three years.
William Hill and SkyBet have contributed to the purchase price. What can you tell us about their involvement with OpenBet moving forward?
It's one of the really nice things about this deal â€“ the endorsement of people who know that business best. Between them, William Hill and SkyBet are effectively writing a Â£100m cheque to say they think the business is fantastic and that NYX is the right owner of that business.
In the same breath, it's also important to note that we maintain our independence. It's one of the things that was critical for us â€“ that we're an independent B2B supplier. We don't operate any online gaming anywhere and we aren't controlled by any particular operator. No board seat, no management control, no access to confidential client information â€“ all of that has been handled through the structure of this deal. We were very focused on making certain all the existing customers are comfortable with the structure of what we've put together.
How confident are you that OpenBet's customers will indeed be comfortable with William Hill's involvement in this deal?
It was one of the most important things for us. When you look at the range of potential acquirers, NYX was definitely the most natural fit when it comes to the existing customers, the management and the strategic shareholders around the business. That said, we also wanted to make certain we were proactive about it, so we reached out to the customers. The endorsement has been great, we've been very encouraged by that. You see that in our press release with the quote from Paddy Power Betfair, who did not invest but are very happy with us being the owner of OpenBet. We've spent 10 years building an independent supply business and we intend to maintain the integrity behind that approach.
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