Key points
- Jumbo shares on the move following UK-based acquisition of StarVale
- Initial consideration of $32.1 million funded by Jumbo's new debt facility
- Low to mid single-digit EPS accretion in the first 12 months post-completion
The Jumbo Interactive Ltd (ASX: JIN) share price soared by 6% in early trading today after the company revealed an acquisition to expand its presence in the United Kingdom (UK).
At the time of writing, the lottery ticket seller's shares are $17.27, up 2.55%. Earlier today, Jumbo Interactive shares reached a price of $17.90, up 6%. They have since been caught up in this afternoon's broader market sell-off, with the S&P/ASX 200 Index (ASX: XJO) down 2.64% to 6,778 points.
Jumbo bolsters United Kingdom portfolio
In a statement to the ASX, Jumbo Interactive advised it has entered into an agreement to acquire 100% of StarVale Group.
Based in the UK, StarVale is a leading External Lottery Manager (ELM) and a digital payments company. The group provides a full range of Society Lottery services (weekly lottery and raffle) and prize draw services.
StarVale services over 850,000 active players across more than 45 charity and not-for-profit clients around the country.
In total, 9.5 million direct debit transactions are processed, reflecting roughly £54 million (A$102.44 million) in transaction value.
Under the deal, Jumbo Interactive will conditionally acquire StarVale for an initial amount of $32.1 million.
In addition, between $7.5 million to $8.5 million of deferred consideration will be payable on 30 June 2023 upon achieving certain earnings hurdles.
The acquisition will be funded by Jumbo Interactive's new $50 million senior debt facility.
Post-completion, StarVale is expected to deliver low to mid single-digit earnings per share (EPS) accretion within the first 12 months.
The acquisition remains subject to approval by the UK Gambling Commission. This is expected by the end of FY22.
Jumbo Interactive noted that this latest purchase provides a unique opportunity to significantly broaden its footprint across the UK.
This follows the acquisition of UK-based Gatherwell in November 2019 and the conditional acquisition of Canada-based Stride in August 2021.
Jumbo Interactive CEO and Founder, Mike Veverka commented:
We identified StarVale as one of our top acquisition opportunities in the UK given their scale and leadership position in the charity lottery market, strong brands, cultural alignment with Jumbo, and their talented leadership team.
The acquisition helps accelerate our strategy to grow internationally and adds significantly more scale to our Managed Services business in the UK.
Jumbo Interactive share price summary
Over the past 12 months, the Jumbo Interactive share price has posted a gain of almost 22%.
The company's shares reached a 52-week high of $19.57 just before the turn of the calendar year. Since then, weak investor sentiment in the market has dragged Jumbo shares down.
Based on today's price, Jumbo commands a market capitalisation of roughly $1.08 billion, with approximately 62.4 million shares on issue.
