Earlier today (4 September), rumours suggesting Genius Sports was weighing up an acquisition offer for Kambi surfaced. Soon after, Kambi’s share price jumped, peaking at 132.70SEK, up 17.5% on opening.
However, both Kambi and Genius have since released statements distancing themselves from the reports. Kambi was first to respond, with chair Anders Ström denying any such talks.
“While Kambi tends not to comment on rumour and speculation, I can confirm that Kambi is not engaged in any such discussions,” Ström said.
Genius CEO Mark Locke made similar comments, saying there has been no discussion between the two suppliers.
“As policy, we do not comment on unfounded and ill-informed rumours,” Locke said. “To prevent any further speculation, we can confirm that we are not involved in any discussions of this nature with Kambi.”
Kambi’s share price has since dropped to SEK117.70, up just 2.8% on the day’s opening price of 112.90SEK at the time of writing. Genius opened at $7.15 on the New York Stock Exchange, which only started trading at 2:00pm BST, but has since dropped to $7.03.
Merger would not benefit Kambi at this time
One industry source failed to see the value in the rumoured combination, noting it would not benefit Kambi during its current transition period.
“A big question for me is one of relative profitability. It seems like a bankers deal and not one that Kambi, which is just embarking on a new journey with a new CEO, should even think about at this stage,” the source told iGB.
Analysts at ABG Sunder Collier believe Kambi is an ideal acquisition opportunity for an operator seeking to bring its sportsbook technology in-house.
“Kambi has a proven product that has powered tier 1 operators in multiple high-activity events, an in-house developed premium betbuilder, and is in the forefront of AI-trading,” the bank said in a June analyst note.
“We believe interest should remain in acquiring Kambi’s well-invested tech at a significantly higher price than Kambi’s EV (enterprise value), especially a few years out.”
Kambi’s EV is estimated at €187m or 3.4x EBITDA, according to ABG Sunder Collier.
What is the latest at Kambi and Genius?
After many years at the helm, Werner Becher took over from Kristian Nylén as CEO for Kambi in July. In terms of Q2 performance, Kambi had a successful few months, with revenue up 6.5% year-on-year to €45.7m. On top of this, EBITDA margin jumped to 16.4%, operating profit hiked 67.0% to €6.2m, and net profit 83.0% to €4.7m.
However, Kambi still sees 2024 as a transitional year, with revenue expected in the range of €170m to €180m. It expects an impact from the Penn migration and recently renewed contracts with Kindred and other clients.
The delayed opening of Brazil’s regulated market has also slowed growth in 2024, although with that market opening from 1 January 2025, Kambi expects to gradually grow market share.
As for Genius Sports, the group extended its live betting data deal with Football DataCo, holder of UK football rights. The deal to 2029 provides Genius with new pre-game and in-play player markets from the 2025-26 season.
Genius Sports’ largest shareholder Apax Partners sold its remaining shares in the business in July. The group increased its financial forecast for the 2024 to hit $500m in revenue, with adjusted EBITDA of $82m. This is up from initial estimates of $480m and $75m, respectively.