Lottoland offer for Tipp24 raises stakes in German lottery battle (updated)

ZEAL Network SE

11/01/2019 16:31

* Lottoland says would pay 60-76 mln euros for Tipp24
    * Follows Tipp24 owner Zeal Network's bid for Lotto24
    * Zeal rejects Lottoland offer as "significantly inadequate"
    * Comes as German sector lottery rules seen tightening 

 (Adds rejection of offer from Zeal)
    By Maiya Keidan and Alexander Hübner
    LONDON/MUNICH, Jan 11 (Reuters) - Gambling company Lottoland
said it was ready to offer up to 76 million euros ($88 million)
for German lottery business Tipp24 in a move which could thwart
the restructuring plans of Tipp24's owner Zeal Network
 TIMGn.DE .
    In Germany, official lottery tickets are sold on behalf of
the state through authorised distributors locally or online,
while so-called 'secondary' lotteries like Tipp24 bet on the
state lottery numbers but are actually unregulated.
    After German authorities announced plans to tighten
oversight of the secondary sector, Zeal decided to pull out of
that business, a person familiar with the matter said.
    Zeal wants to switch its business model from a secondary
lottery to the legal distribution of state lottery tickets. The
company wants to keep the well-known Tipp24 brand and through it
sell official lottery tickets, the source said.
    As part of that plan, it made an offer to buy Lotto24 AG
 LO24n.DE , a former subsidiary that already sells official
lottery tickets.    
    On Friday, Gibraltar-based Lottoland entered the fray with
its alternative plan, a conditional offer for Tipp24 pitched at
60-76 million euros, subject to due diligence.
    "We believe that Lottoland's proposed offer is superior to
the contemplated transaction and... should be put to the
shareholders to evaluate," Lottoland said in a letter to the
board of Zeal seen by Reuters.
    Zeal rejected the offer which it described as "significantly
inadequate" and said would deprive Zeal of its most valuable
asset.
    "The indicative offer from Lottoland is an attempt to buy
our core German assets on the cheap," Chief Executive Helmut
Becker said in a statement.
    Speaking to Reuters, Lottoland Chief Executive Nigel Birrell
said the proposed Lotto24 deal would be "value destructive" and
there was a "good chance" it would be rejected by shareholders.
    Activist manager Burren Capital Advisors on Jan. 4 told the
Zeal board its bid for Lotto24 was "not in the best interests of
Zeal's minority shareholders".
    Top-five Zeal shareholder Marc Peters, who holds 4.8 percent
of the shares, on Thursday told Reuters he also did not support
the acquisition.
($1 = 0.8680 euros)

 (Additional reporting by Caroline Copley
Editing by Keith Weir and Elaine Hardcastle)
 ((Maiya.Keidan@thomsonreuters.com; 44 207 542 1594; Reuters
Messaging: maiya.keidan.thomsonreuters.com@reuters.net))