ZEAL Network SE rejects non-binding offer from Lottoland for the purchase of its core German business assets as significantly inadequate

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ZEAL Network SE (-) 
ZEAL Network SE rejects non-binding offer from Lottoland for the purchase of 
its core German business assets as significantly inadequate 
 
11-Jan-2019 / 16:29 CET/CEST 
Dissemination of a Regulatory Announcement, transmitted by EQS Group. 
The issuer is solely responsible for the content of this announcement. 
 
_London, 11 January 2019_ 
 
*ZEAL Network SE rejects non-binding offer from Lottoland for the purchase 
of its core German business assets as significantly inadequate* 
 
· _Indicative offer price range of EUR 60 million to EUR 76 million 
neglects the value of ZEAL's German business_ 
 
· _Sale would strip ZEAL of its most valuable asset and the basis for 
future brokerage growth in Germany, while leaving ZEAL and its 
shareholders with considerable downside risks_ 
 
· _Dr Helmut Becker, CEO, ZEAL: 'The indicative offer from Lottoland is an 
attempt to buy our core German assets on the cheap.'_ 
 
ZEAL Network SE ('ZEAL') rejects the non-binding, conditional and indicative 
offer from Lottoland Holdings ('Lottoland') for the purchase of assets of 
the ZEAL Group representing the core of the German business as currently 
operating under the Tipp24 brand as significantly inadequate. The cash 
purchase price offered by Lottoland, subject to due diligence, ranges from 
EUR 60 million to EUR 76 million. 
 
The Executive Board of ZEAL has reviewed the proposed indicative offer from 
Lottoland on the basis of the publicly available disclosure from Lottoland 
and on internal valuations made ahead of the announcement of the Lotto24 
transaction. Based on this review, the Executive Board rejects the offer as 
significantly inadequate. Even at the high end of the implied price range 
indicated by Lottoland, the offer neglects the fundamental value of the 
German core business of ZEAL. The German business of Tipp24 contributes by 
far the largest part of ZEAL's revenues and earnings. At the same time, its 
client base and brand represent the key part of the growth platform for the 
future German lottery brokerage business, following the planned 
transformation of ZEAL's current German secondary lottery business into a 
locally licensed online brokerage model and the agreed combination with 
Lotto24. 
 
A sale of the Tipp24 business would therefore strip ZEAL of its most 
valuable asset, i.e. the entire customer base in Germany and the brand, and 
therefore of its potential for future growth in Germany. At the same time, 
ZEAL and its shareholders would be left with the execution risk of the 
necessary break-up of the business and the associated restructuring costs 
for the employees which would not be part of the deal. In addition, ZEAL and 
its shareholders would be left with the contingent risk from pending 
litigation about the payment of value-added tax (VAT) in Germany, which 
would also limit potential cash distributions to ZEAL shareholders. 
 
The Executive Board of ZEAL has determined that the implied value per share 
of the Lottoland offer, which is based on very optimistic assumptions 
regarding the ability to monetise the remaining ZEAL business, and which 
neglects the implementation and tax risks mentioned above, significantly 
undervalues the future prospects of ZEAL. Shareholders should in particular 
take into consideration the share price targets for ZEAL recently published 
by independent analysts. The offer therefore does not provide a reasonable 
basis for engagement with Lottoland. The planned and agreed combination with 
Lotto24 has a superior strategic rationale, offers the best opportunity for 
sustainable growth and creates higher value for ZEAL's shareholders. In 
light of this assessment, ZEAL also reiterates that the general meeting on 
18 January will not be postponed. 
 
Dr Helmut Becker, CEO, ZEAL, commented: 'The indicative offer from Lottoland 
is an attempt to buy our core German assets on the cheap. It does not 
reflect the value of our German business. At the same time, a sale of our 
core business would leave ZEAL and its shareholders with all downside risks 
from pending VAT litigation in Germany and with significant costs from 
restructuring the rest of the business. Our plan to convert Tipp24 into a 
brokerage business and to combine it with Lotto24 will create a strong 
platform for future growth and is far superior to the Lottoland proposal. 
The positive preliminary results announced today by Lotto24 further 
emphasise the attractiveness of the brokerage business model. Lottoland's 
offer therefore confirms our view that their main intention is to disrupt 
the Lotto24 transaction, driven by their business interests as a 
competitor.' 
 
*ENDS 
 
Press contact:* 
ZEAL Network 
Matt Drage 
Head of Corporate Communications 
T: [phone] 
[e-mail] 
 
FTI Consulting 
Lutz Golsch 
T: [phone] 
M: [phone] 
[e-mail] 
 
*Investor contact:* 
ZEAL Network 
Frank Hoffmann 
Investor Relations Manager 
[phone] 
[e-mail] 
 
*Important note* 
This announcement is for information purposes only and neither constitutes 
an offer to purchase or exchange nor an invitation to sell or to make an 
offer to exchange, securities of Lotto24 AG ('Lotto24') or ZEAL Network SE 
('ZEAL'). The final terms and further provisions regarding the public 
takeover offer will be disclosed in the offer document once its publication 
will have been approved by the German Federal Financial Supervisory 
Authority (Bundesanstalt für Finanzdienstleistungsaufsicht). ZEAL reserves 
the right to deviate in the final terms and conditions of the public 
takeover offer from the basic information described herein. Investors and 
holders of securities of Lotto24 are strongly recommended to read the offer 
document and all announcements in connection with the public takeover offer 
as soon as they are published, as they contain or will contain important 
information. 
 
The offer will be made exclusively under the laws of the Federal Republic of 
Germany, in particular under the German Securities Acquisition and Takeover 
Act (Wertpapiererwerbs- und Übernahmegesetz (WpÜG)). The offer 
will not be made pursuant to the provisions of jurisdictions other than 
those of the Federal Republic of Germany. Therefore, no other announcements, 
registrations, admissions or approvals of the offer outside of the Federal 
Republic of Germany have been filed, arranged for or granted. 
 
The ZEAL shares have not been and will not be registered under the U.S. 
Securities Act of 1933, as amended, or with any securities regulatory 
authority of any state or any other jurisdiction of the United States of 
America ('USA'). Therefore, subject to certain exceptions, ZEAL shares may 
not be offered or sold within the USA or in any other jurisdiction where to 
do so would be a violation of applicable law. There is no public offering of 
ZEAL shares in the USA. 
 
To the extent this announcement contains forward-looking statements, such 
statements do not represent facts. Forward-looking statements include all 
matters that are not historical facts. They are characterised by the words 
'expect', 'believe', 'estimate', 'intend', 'aim', 'assume', 'plan' or 
similar expressions. Such statements express the intentions, opinions or 
current expectations and assumptions of ZEAL and the persons acting in 
conjunction with ZEAL, for example with regard to the potential consequences 
of the takeover offer for Lotto24, for those shareholders of Lotto24 who 
choose not to accept the takeover offer or for future financial results of 
Lotto24. Such forward-looking statements are based on current plans, 
estimates and forecasts which ZEAL and the persons acting in conjunction 
with it have made to the best of their knowledge, but which do not claim to 
be correct in the future. Forward-looking statements are subject to risks 
and uncertainties that are difficult to predict and usually cannot be 
influenced by ZEAL or the persons acting in conjunction with it. Actual 
events or consequences may differ materially from those contained in or 
expressed by such forward-looking statements. 
 
This release and any materials distributed in connection with this release 
are not directed to or intended for release, publication or distribution (in 
whole or in part) directly or indirectly into or from the USA or any other 
jurisdiction where to do so would constitute a violation of the relevant 
laws of such jurisdiction, nor are they directed to, or intended for use by, 
any person or entity that is a citizen or resident or located in the USA or 
in any locality, state, country or other jurisdiction where such release, 
distribution, publication, availability or use would constitute a violation 
of the relevant laws of such jurisdiction or which would require any 
registration or licensing within such jurisdiction. 
 
Lazard & Co., Limited ('Lazard'), which is authorised and regulated in the 
United Kingdom by the Financial Conduct Authority, is acting exclusively for 
ZEAL Network SE and no one else in connection with the proposals referred to 
in this document. Lazard will not be responsible to anyone other than ZEAL 
Network SE for providing the protections afforded to clients of Lazard nor 
for providing advice in relation to any of the matters referred to or 
contemplated in this document. Neither Lazard nor any of its affiliates owes 
or accepts any duty, liability or responsibility whatsoever (whether direct 
or indirect, whether in contract, in tort, under statute or otherwise) to 
any person who is not a client of Lazard in connection with this document, 
any statement or report contained herein, any of the matters referred to or 
contemplated in this document or otherwise. 
 
ISIN:          GB00BHD66J44 
Category Code: MSCM 
TIDM:          - 
LEI Code:      391200EIRBXU4TUMMQ46 
Sequence No.:  7147 
EQS News ID:   765469 
 
End of Announcement EQS News Service 
 
 

(END) Dow Jones Newswires

January 11, 2019 10:30 ET (15:30 GMT)