The Potential Sale of ComeOn: A Strategic Shift for Cherry and the Online Gambling Industry
Preliminary Stages of the Decision
The online gambling landscape is rife with complexities, and one of the most discussed topics currently is the potential sale of ComeOn. While this prospect is still in its infancy and not yet guaranteed, preliminary evaluations suggest that ComeOn’s value stands at an impressive 8-9 times its anticipated EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). This significant valuation is indicative of ComeOn’s solid standing within the industry, yet representatives from Cherry, Bridgepoint, and ComeOn have remained tight-lipped regarding any formal announcements about the sale.
The implications of this potential divestment are noteworthy, especially for Cherry, the parent company that acquired 100% of ComeOn’s operations for €280 million back in 2017. Since that time, ComeOn has expanded its footprint significantly by growing to manage 15 online casino and sports betting brands throughout Europe, including recognizable names such as Getlucky and Mobilebet. If the sale moves forward, it could represent a pivotal moment for both Cherry and the online gambling sector, as it reflects shifting strategies in a rapidly evolving market.
Market Challenges
Despite the growth and increased valuation since its acquisition, Cherry has faced numerous challenges that may be motivating the potential sale of ComeOn. One of the most significant hurdles has been the ever-evolving regulatory landscape across Europe. In 2019, Sweden implemented new regulations that directly impacted Cherry’s operational capabilities, limiting its market activities and introducing increased scrutiny. Additionally, the tightening of restrictions in Germany has also hampered Cherry’s performance, necessitating a reevaluation of its business strategies.
Furthermore, Cherry has struggled to divest other subsidiaries, which has only intensified its focus on potential sales. An aborted attempt to sell Yggdrasil, a prominent game developer in its portfolio, highlighted this struggle when the offers received were deemed insufficient. Selling ComeOn may enable Cherry to pivot away from consumer-facing operations and concentrate on its burgeoning B2B services, which have shown a greater potential for profitability in recent years. This strategic shift could be vital for Cherry as it seeks to realign its business model in the face of regulatory challenges.
Potential Market Interest
While the sale of ComeOn is not yet confirmed, market speculation suggests that an auction could take place in the near future, likely later this year. This potential event has already attracted the interest of various parties, primarily consisting of European-based private equity firms and other gambling operators eager to enhance their presence in regulated markets.
Given ComeOn’s robust market share in Sweden and its recent acquisition of a Dutch online gambling license in 2022, the company presents itself as a prime candidate for acquisition. The strategic location and regulatory compliance across multiple jurisdictions make ComeOn an attractive prospect for firms looking to capitalize on the growing online gaming industry.
As the online gambling market continues to mature, consolidation could become a critical strategy for companies aiming to maintain competitiveness. Should the sale of ComeOn materialize, it may not only alter Cherry’s operational landscape but also signal wider trends within the industry, where flexibility and adaptation to regulations will be paramount for success.
Conclusion
The potential sale of ComeOn is a multifaceted situation that underscores the complexities of the online gambling industry. With Cherry’s earlier ambitions now challenged by regulatory limitations, the possible divestment represents both a necessity and an opportunity. As market dynamics shift, the sale could pave the way for new growth strategies, both for Cherry and the acquiring entities. Industry watchers will be keenly observing this development, as it may set the tone for future transactions in the evolving landscape of online gambling.
