Hard Rock Digital Strikes Deal for 888's US B2C Assets

In a groundbreaking move, Hard Rock Digital has clinched an agreement to acquire select US B2C assets from 888, following an extensive strategic evaluation of its American operations.

Details surrounding the specific assets earmarked for acquisition, along with financial terms, remain undisclosed.

However, 888 has confirmed that the deal's finalization will occur in stages, anticipated to conclude by the fourth quarter of this year, pending regulatory green lights.

This transaction comes swiftly on the heels of 888 initiating a strategic review just weeks ago, indicating a concerted effort to explore avenues for enhancing shareholder value.

Among the alternatives deliberated during the review was the partial or complete divestment of its US B2C operations, a decision that will not affect its existing B2B partnerships in the US market.

Concerns over profitability prompted 888 to recognize the need for restructuring, citing lower gross profit margins in the US compared to group averages.

The company attributed this disparity to significant operational costs, including duties, market access fees, and licensing expenses, compounded by stiff competition from well-capitalized incumbents.

In a bid to optimize returns, 888 has embarked on a controlled exit strategy from its US B2C operations.

Pending regulatory approvals, it plans to cease all remaining assets by the end of this year. This move is expected to yield an annualized boost to adjusted EBITDA of approximately £25.0m from 2025 onwards, with £10.0m earmarked for reinvestment in growth initiatives.

The decision to part ways extends to its partnership with Authentic Brands Group and the Sports Illustrated brand, signalling an end to ventures such as the SI Sportsbook and SI Casino in select states.

As part of the mutual agreement, 888 will pay $25.0m upfront and an additional $25.0m over the subsequent years.

This strategic realignment aligns with 888's recent financial disclosures, which included a robust performance for the fiscal year 2023.

CEO Per Widerström sees this as a pivotal moment despite initial setbacks, heralding a proposed rebranding to 'Evoke' pending shareholder approval at the next AGM, aiming to reflect the group's diversified brand portfolio better.

Additionally, a new Value Creation Plan (VCP) has been unveiled, emphasizing cost-saving measures, streamlined market approaches, and disciplined capital allocation strategies to ensure sustained growth and profitability for 888 in the long term.