REG-ZEAL Network SE ZEAL Network SE rejects non-binding offer from Lottoland for the purchase of its core German business assets as significantly inadequate

ZEAL Network SEAnnouncement

11/01/2019 15:30

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   ZEAL Network SE (-)
   ZEAL Network SE rejects non-binding offer from Lottoland for the purchase
   of its core German business assets as significantly inadequate

   11-Jan-2019 / 16:29 CET/CEST
   Dissemination of a Regulatory Announcement, transmitted by EQS Group.
   The issuer is solely responsible for the content of this announcement.

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   London, 11 January 2019

   ZEAL Network SE rejects non-binding offer from Lottoland for the purchase
   of its core German business assets as significantly inadequate

     • Indicative offer price range of EUR 60 million to EUR 76 million
       neglects the value of ZEAL's German business
     • Sale would strip ZEAL of its most valuable asset and the basis for
       future brokerage growth in Germany, while leaving ZEAL and its
       shareholders with considerable downside risks
     • Dr Helmut Becker, CEO, ZEAL: 'The indicative offer from Lottoland is
       an attempt to buy our core German assets on the cheap.'

    

   ZEAL Network SE ('ZEAL') rejects the non-binding, conditional and
   indicative offer from Lottoland Holdings ('Lottoland') for the purchase of
   assets of the ZEAL Group representing the core of the German business as
   currently operating under the Tipp24 brand as significantly inadequate.
   The cash purchase price offered by Lottoland, subject to due diligence,
   ranges from EUR 60 million to EUR 76 million.

   The Executive Board of ZEAL has reviewed the proposed indicative offer
   from Lottoland on the basis of the publicly available disclosure from
   Lottoland and on internal valuations made ahead of the announcement of the
   Lotto24 transaction. Based on this review, the Executive Board rejects the
   offer as significantly inadequate. Even at the high end of the implied
   price range indicated by Lottoland, the offer neglects the fundamental
   value of the German core business of ZEAL. The German business of Tipp24
   contributes by far the largest part of ZEAL's revenues and earnings. At
   the same time, its client base and brand represent the key part of the
   growth platform for the future German lottery brokerage business,
   following the planned transformation of ZEAL's current German secondary
   lottery business into a locally licensed online brokerage model and the
   agreed combination with Lotto24.

   A sale of the Tipp24 business would therefore strip ZEAL of its most
   valuable asset, i.e. the entire customer base in Germany and the brand,
   and therefore of its potential for future growth in Germany. At the same
   time, ZEAL and its shareholders would be left with the execution risk of
   the necessary break-up of the business and the associated restructuring
   costs for the employees which would not be part of the deal. In addition,
   ZEAL and its shareholders would be left with the contingent risk from
   pending litigation about the payment of value-added tax (VAT) in Germany,
   which would also limit potential cash distributions to ZEAL shareholders.

   The Executive Board of ZEAL has determined that the implied value per
   share of the Lottoland offer, which is based on very optimistic
   assumptions regarding the ability to monetise the remaining ZEAL business,
   and which neglects the implementation and tax risks mentioned above,
   significantly undervalues the future prospects of ZEAL. Shareholders
   should in particular take into consideration the share price targets for
   ZEAL recently published by independent analysts. The offer therefore does
   not provide a reasonable basis for engagement with Lottoland. The planned
   and agreed combination with Lotto24 has a superior strategic rationale,
   offers the best opportunity for sustainable growth and creates higher
   value for ZEAL's shareholders. In light of this assessment, ZEAL also
   reiterates that the general meeting on 18 January will not be postponed.

   Dr Helmut Becker, CEO, ZEAL, commented: 'The indicative offer from
   Lottoland is an attempt to buy our core German assets on the cheap. It
   does not reflect the value of our German business. At the same time, a
   sale of our core business would leave ZEAL and its shareholders with all
   downside risks from pending VAT litigation in Germany and with significant
   costs from restructuring the rest of the business. Our plan to convert
   Tipp24 into a brokerage business and to combine it with Lotto24 will
   create a strong platform for future growth and is far superior to the
   Lottoland proposal. The positive preliminary results announced today by
   Lotto24 further emphasise the attractiveness of the brokerage business
   model. Lottoland's offer therefore confirms our view that their main
   intention is to disrupt the Lotto24 transaction, driven by their business
   interests as a competitor.'

   ENDS

   Press contact:
   ZEAL Network
   Matt Drage
   Head of Corporate Communications
   T: +44 (0)7976 872 861
   matt.drage@zeal-network.co.uk

   FTI Consulting
   Lutz Golsch
   T: +49 69 920 37 110
   M: +49 173 6517710
   Lutz.Golsch@fticonsulting.com

   Investor contact:
   ZEAL Network
   Frank Hoffmann
   Investor Relations Manager
   +44 (0) 20 3739 7123
   frank.hoffmann@zeal-network.co.uk

   Important note
   This announcement is for information purposes only and neither constitutes
   an offer to purchase or exchange nor an invitation to sell or to make an
   offer to exchange, securities of Lotto24 AG ('Lotto24') or ZEAL Network SE
   ('ZEAL'). The final terms and further provisions regarding the public
   takeover offer will be disclosed in the offer document once its
   publication will have been approved by the German Federal Financial
   Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht).
   ZEAL reserves the right to deviate in the final terms and conditions of
   the public takeover offer from the basic information described herein.
   Investors and holders of securities of Lotto24 are strongly recommended to
   read the offer document and all announcements in connection with the
   public takeover offer as soon as they are published, as they contain or
   will contain important information.

   The offer will be made exclusively under the laws of the Federal Republic
   of Germany, in particular under the German Securities Acquisition and
   Takeover Act (Wertpapiererwerbs- und Übernahmegesetz (WpÜG)). The offer
   will not be made pursuant to the provisions of jurisdictions other than
   those of the Federal Republic of Germany. Therefore, no other
   announcements, registrations, admissions or approvals of the offer outside
   of the Federal Republic of Germany have been filed, arranged for or
   granted.

   The ZEAL shares have not been and will not be registered under the U.S.
   Securities Act of 1933, as amended, or with any securities regulatory
   authority of any state or any other jurisdiction of the United States of
   America ('USA'). Therefore, subject to certain exceptions, ZEAL shares may
   not be offered or sold within the USA or in any other jurisdiction where
   to do so would be a violation of applicable law. There is no public
   offering of ZEAL shares in the USA.

   To the extent this announcement contains forward-looking statements, such
   statements do not represent facts. Forward-looking statements include all
   matters that are not historical facts. They are characterised by the words
   'expect', 'believe', 'estimate', 'intend', 'aim', 'assume', 'plan' or
   similar expressions. Such statements express the intentions, opinions or
   current expectations and assumptions of ZEAL and the persons acting in
   conjunction with ZEAL, for example with regard to the potential
   consequences of the takeover offer for Lotto24, for those shareholders of
   Lotto24 who choose not to accept the takeover offer or for future
   financial results of Lotto24. Such forward-looking statements are based on
   current plans, estimates and forecasts which ZEAL and the persons acting
   in conjunction with it have made to the best of their knowledge, but which
   do not claim to be correct in the future. Forward-looking statements are
   subject to risks and uncertainties that are difficult to predict and
   usually cannot be influenced by ZEAL or the persons acting in conjunction
   with it. Actual events or consequences may differ materially from those
   contained in or expressed by such forward-looking statements.

   This release and any materials distributed in connection with this release
   are not directed to or intended for release, publication or distribution
   (in whole or in part) directly or indirectly into or from the USA or any
   other jurisdiction where to do so would constitute a violation of the
   relevant laws of such jurisdiction, nor are they directed to, or intended
   for use by, any person or entity that is a citizen or resident or located
   in the USA or in any locality, state, country or other jurisdiction where
   such release, distribution, publication, availability or use would
   constitute a violation of the relevant laws of such jurisdiction or which
   would require any registration or licensing within such jurisdiction.

   Lazard & Co., Limited ('Lazard'), which is authorised and regulated in the
   United Kingdom by the Financial Conduct Authority, is acting exclusively
   for ZEAL Network SE and no one else in connection with the proposals
   referred to in this document. Lazard will not be responsible to anyone
   other than ZEAL Network SE for providing the protections afforded to
   clients of Lazard nor for providing advice in relation to any of the
   matters referred to or contemplated in this document. Neither Lazard nor
   any of its affiliates owes or accepts any duty, liability or
   responsibility whatsoever (whether direct or indirect, whether in
   contract, in tort, under statute or otherwise) to any person who is not a
   client of Lazard in connection with this document, any statement or report
   contained herein, any of the matters referred to or contemplated in this
   document or otherwise.

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   ISIN:          GB00BHD66J44
   Category Code: MSCM
   TIDM:          -
   LEI Code:      391200EIRBXU4TUMMQ46
   Sequence No.:  7147
   EQS News ID:   765469


    
   End of Announcement EQS News Service

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