Lottoland Chief Executive Nigel Birrell has urged Zeal Network SE investors to reject the firm’s planned acquisition of German competitor Lotto24 AG, a transaction which will be voted for at a scheduled Zeal AGM on 18 January.
Yesterday Birrell published an open letter to Zeal’s Dr Helmut Becker (CEO) and Jonas Mattson (CFO) questioning the ‘value and economic sense’ of its planned takeover of Lotto24.
As an investor in Zeal Network, Lottoland states that Lotto24’s enterprise has been significantly overvalued at 100x EBIT value, with Zeal leadership unable to justify ‘theoretic cost synergies’ attached to the transaction.
Furthermore, the harshly penned letter details an outright opposition to the deal, which Birrell claims has been driven by a vested interest towards certain shareholders – naming Zeal investors Gunther Group and Oliver Jaster.
“The announced reasons for the Transaction are not only vague but unsubstantiated and raise several significant issues. In particular, we believe the board of directors has acted in the interest of certain shareholders and in doing so has not objectively and adequately explored any alternative option which could lead to a better deal for all shareholders”
Birrell claims that should the takeover which has been approved by Germany’s Federal Cartel Office be processed, it will simply lead to value destruction for Zeal stakeholders, who should move terminate the transaction at the AGM.
Lottoland’s CEO demands that Dr Becker and Mattson answer nine critical questions attached to the Lotto24 deal, which have been made with the interest of all shareholders.
Closing his statement, Birrell states that Lottoland will make an ‘alternative offer’ for ‘certain assets’ of Zeal Network, with Lottoland moving to contact Zeal with details of an alternative transaction, with a view to publishing its counteroffer by January 31 2019.