French entrepreneur Stéphane Courbit will take his television production company Banijay and online sports gambling group Betclic public via a Spac backed by prominent investors, including Bernard Arnault and Vincent Bolloré.
The deal gives the new company, FL Entertainment, an enterprise value of €7.2bn, or €4.1bn in equity value. The shares will begin trading on Euronext in Amsterdam on July 1.
The move will allow Courbit, a savvy 57-year-old investor whose early success was in reality TV shows, to list the businesses he has spent more than two decades building via debt-backed acquisitions.
Banijay is one of the biggest independent TV content producers outside the US with €2.8bn in sales and €433mn of ebitda last year, having benefited from a hot market driven by the growth of streaming services.
It owns a sprawling network of production companies that turn out reality shows such as Master Chef and Temptation Island, as well as scripted dramas such as Versailles. But the €2bn acquisition of Endemol Shine announced in 2019 left it needing to raise €2.4bn of debt just as the pandemic hit Europe, shutting down TV production.
The other part of the business is the fast-growing Betclic, which is licensed to operate sports betting in France, Italy, Poland and Portugal and is looking to expand internationally. It brought in €700mn in sales last year, making it much smaller than UK rivals Flutter Entertainment and Bet365.
“It is time to move to the next stage for Banijay and Betclic,” Courbit said in an interview. “Both the content production and sports betting are globalising businesses where scale is important and the listing will allow us to grow further and consider more acquisitions.”
FL Entertainment will merge with a Spac called Pegasus Entrepreneurs, one of three such vehicles founded by Tikehau Capital, a European asset management company, and Financière Agache, LVMH founder Arnault’s investment company.
Existing shareholders in Banijay and Betclic, such as Bolloré’s Vivendi, the Monaco-owned fund Société des Bains de Mer and billionaire Marc Ladreit de Lacharrière’s Fimalac, have agreed to reinvest in the new company and will own 20 per cent, 10 per cent and 7 per cent of the share capital respectively.
The Spac deal will raise €250mn from “Pipe” financing — discounted shares sold to institutional investors — plus a non-redemption agreement, as well as €250mn from Courbit’s company Financière Lov, taking the total to more than €600mn in cash commitments.
Spacs, or special purpose acquisition companies, are shell companies that raise money from investors and list on the stock market. Their sponsors then search for a private company to take public through a merger. They experienced a surge of popularity in the US starting in 2020, but have since attracted regulatory scrutiny and criticism from sceptics who have said they lead to hyped valuations and sponsors enriching themselves.
Courbit said his planned listing via the Pegasus Spac was different because the sponsors were putting more money in, rather than cashing out. He argued that the transaction was a faster and more efficient way to reorganise and list the businesses than a traditional initial public offering.
The newly listed entity will have a stronger balance sheet, he added, cutting its net debt-to-ebitda ratio to between 3 and 3.5 times, from more than 4 times today.
He said the company could eventually look to add a new business line in addition to TV content production and sports betting. “We will be opportunistic on acquisitions,” he added.