Sky sells controlling stake in online betting business

Sky has agreed to sell a controlling stake in its online betting and gaming business, Sky Bet, to CVC Capital Partners in a deal worth £800 million.

The sale will enable the enlarged Sky to “focus on the significant opportunity for growth” in pay TV across the five markets in which it now operates.

Under the terms of the transaction, Sky will receive cash of £600 million on completion and further “deferred and contingent consideration” up to the value of £120 million.

The total value of £800 million represents a multiple of approximately 15 times earnings before interest, taxes, depreciation and amortisation (EBITDA) for the 12 months ended 30 June 2014.

Sky will retain an equity stake of approximately 20 per cent in Sky Bet and ongoing board representation. As part of the transaction Sky has also entered into a long-term brand licence agreement with Sky Bet.

The Sky Bet management team, under the leadership of managing director Richard Flint, will remain with the business under the new ownership structure with all Sky Bet’s employees moving across into the new entity. The business will remain headquartered in Leeds.

“In the last ten years, we have successfully grown Sky Bet from a start-up to one of the leading online betting and gaming companies in the UK,” said Jeremy Darroch, group chief executive of Sky.

“This transaction will allow us to focus further on the substantial growth opportunities in our core international pay TV business while realising significant value for our shareholders.”

The transaction is subject to regulatory clearances in the UK and Ireland and is expected to close in the first quarter of 2015.