Vladimír Urbánek (Kurzy.cz)
Czech markets  |  May 31, 2011 08:46:08

Fortuna made a bid for lottery bets 2-2.5 billion

Fortuna officially submitted a bid for the purchase of lottery activities bets yesterday officially fell into bankruptcy. For lottery offers 2 - 2.5 billion CZK (38 - 48 CZK per share Fortuna) depending on the outcome of the analysis of company property. The offer is also a payment of approximately CZK 300 million a year from sports federations lottery revenues. Bet those looking for more and more meetings will be quite lengthy, which is positive for Fortune even if the bet won. In the second half of July started its own lottery and unsettled situation stakes could start much easier and help to accelerate the acquisition of market share. Unresolved issues also remains possible to finance the acquisition.The company itself is currently in its balance sheet available to approximately 25 million euros (600 million CZK). It would be so compelled to secure financing, either debt (loans or bonds) or the issue of new shares. Overall, the range of Fortune perceive more positively because they continue to extend and complicate the restructuring Sazka and that the bid was successful as we see rather less likely.

If Fortuna managed to get a bet, we evaluated the transaction positively, but still we see the risk in both antitrust regulation, or potential competing takeover bids.The whole thing about Sazka in our opinion far from being near its end. Current status and in particular uncertainty about the viability of the project records Sazka still competitive Lottery Lotto Fortuna, which should be launched in mid-July.

Ondrej Moravanský

Lottery market in the CR (= bet) mining had last year about 3-3.5 billion CZK, and offer Fortuny is so at 0.8 times.Fortuna is trading at 2.6 times the expected yield for this year, and therefore its offer with a large discount to its value (although it would require an adjustment to payments sports associations). Sazka had free cash flow of around approximately CZK 700 million (pre-payments for Sazka Arena) and if we assume that Fortune would remain about CZK 400 million in net profit and the price would be in the range P / E 5-6 (against his the expected P / E in 2011, 20). However, it is natural that Fortuna serves its offer at a discount, because it runs its own lottery and the offer is not in effect for 100% of the market. We do not think that PPF and KKCG would "allow" this transaction at this low multiples.

V. Kmínek

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