Preliminary Stages of the Decision
The potential sale of ComeOn is a developing story that could alter the landscape of online gambling in Europe. While details remain scarce and no official statements have been issued by key stakeholders such as Cherry, Bridgepoint, and ComeOn, the valuation of ComeOn is reported to be between 8-9 times its forecasted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This indicates a significant interest from potential buyers, although no guarantees have yet emerged regarding the sale’s finalization.
To understand the implications of this potential transaction, it’s essential to look back at Cherry’s history with ComeOn. In 2017, Cherry acquired 100% of the online gambling operator for €280 million. Since that time, ComeOn has grown its portfolio to include 15 online casino and sports betting brands across Europe, showcasing its capacity for expansion and adaptability in a competitive market. This growth trajectory makes the sale even more intriguing, as it signals Cherry’s strategic evaluation of its assets in light of changing market dynamics.
Market Challenges
Despite the impressive growth following the acquisition, Cherry faces several formidable market challenges that may have paved the way for a potential sale of ComeOn. A key hurdle has been regulatory changes in Sweden, one of Cherry’s primary markets. In 2019, the Swedish government enacted measures that restricted gambling operations, causing Cherry to recalibrate its business strategies. This was compounded by stricter regulations in Germany, where online gaming laws have negatively impacted performance and revenue generation for established operators.
Additionally, Cherry has struggled with the divestiture of its other subsidiaries. A notable example is Yggdrasil, a prominent game developer within Cherry’s portfolio. Efforts to offload Yggdrasil have been met with disappointing offers, indicating a broader trend of market hesitance. Given these challenges, a divestiture of ComeOn could allow Cherry to refocus its business model towards more profitable B2B services, which are showing greater promise compared to its consumer-focused operations. This strategic shift underscores the importance of adaptability in a market characterized by ever-evolving regulations and consumer preferences.
Potential Market Interest
As the curtains rise on the potential auction of ComeOn, speculation mounts regarding who might be interested in making a bid. While the sale remains uncertain, indicators suggest that European-based private equity firms and gambling operators could be at the forefront of the bidding process. Given ComeOn’s established presence in regulated markets such as Sweden—as well as its recent acquisition of a Dutch online gambling license in 2022—there is ample incentive for firms seeking to bolster their market share and operational footprint.
The anticipated auction later this year could attract a wide array of bidders, each motivated by their unique strategic interests. For instance, acquisitions such as ComeOn could provide a launchpad for expansion within regulated jurisdictions, create synergy with existing operations, or even serve as a means to tap into the growing online gaming demographic across Europe.
Conclusion
In summary, the potential sale of ComeOn is an evolving narrative marked by uncertainties and opportunities. While Cherry’s journey since acquiring ComeOn in 2017 has been characterized by substantial growth, the regulatory challenges and operational difficulties encountered necessitate a careful reevaluation of its portfolio. Should an auction occur, it could present lucrative opportunities for interested parties looking to navigate the complexities of regulated online gambling markets. As we await further developments, the industry remains intrigued by the possibilities that a sale may unfold.
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