Kambi Stock Rebounds After Big Loss From DraftKings Merger
Kambi Group’s stock on Friday saw an increase of 20 points, giving some relief to shareholders after the stock plummeted early in the week when DraftKings Sportsbook announced a merger with Kambi competitor SBTech. The bounce back in the market is a reflection of Kambi Group’s strength and presence in the industry.
DraftKings announced on Monday it is merging with SBTech, a Bulgarian sports betting technology provider, and Diamond Eagle Acquisition Group, a special purpose acquisition company (SPAC). After the announcement, Kambi Group’s stock, which is traded on NASDAQ Stockholm, fell by 53 points, or 30 percent. It is down 35 percent overall for the month.
Like SB Tech, Kambi Group is a business-to-business back-end tech provider for sportsbooks. Kambi handles services for many notable sports betting providers, such as 888 Holdings, ATG, Penn National Gaming and Rush Street Interactive, in addition to DraftKings.
Kambi CEO Kristian Nylén said in a statement the company believes the combination of a competitor and a high-profile operator has the potential to strengthen the appeal of Kambi in the future sales processes.
Nylén added that Kambi will continue to provide the same high levels of service for DraftKings, saying that no notice of termination has been given. He said that should notice be given, the company will inform the market. The future of a planned DraftKings-Kambi extension into sports-betting states such as Colorado, Indiana, Iowa, Maine, New York, Pennsylvania, Tennessee and West Virginia is now up in the air.
The price-to-earnings ratio (P/E) for Kambi declined from 57.8 to 37.8 over the last month, which was still above average in its market. Kambi’s P/E saw an increase on Friday, bouncing back from the merger news, and currently sits at 44.47.
Kambi Still Making Deals In America
Kambi continues to grow its U.S. market presence. Recently, the sportsbook tech company signed a partnership with Seneca Gaming Corp., providing back-end services to the Seneca Resorts & Casinos’ three properties in New York, with online services to follow pending regulation.
In September, Kambi announced it was entering a long-term, multi-channel sportsbook partnership with JACK Entertainment in Ohio, even though the state has yet to approve sports betting. The move ensures that the companies will be ready when Ohio does approve legislation.
According to a report by Simply Wall St., Kambi Group has a net cash of 34 million Euro, or $37,997,720. Kambi’s continued growth in the U.S. market and its healthy balance sheet give the company potential for further growth in the stock market.
DraftKings to Go Public in Merger Deal
It was rumored in June that DraftKings was close to buying SBTech but ended up expanding its partnership with Kambi Group just two months later, extending their deal to eight additional states. Despite that extension, in what came as a surprise to many, DraftKings announced Monday its three-way merger with SBTech and Diamond Eagle.
DraftKings is going public in a unique way by merging with Diamond Eagle Acquisition Group (DEAC.ST). The three companies are joining to form a new firm worth $3.3 billion under the DraftKings name, and CEO Jason Robins will remain in control of the new company.
The DraftKings merger should close in the first half of 2020.
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