Entain’s €104 million counterclaim drama

Lea Hogg March 26, 2024

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Entain’s €104 million counterclaim drama

The case of legal drama unfolds between Entain Plc and Sports Entertainment Media BV, a saga of disputed valuations and contested compliance that has found its way to the esteemed High Court of Justice of England and Wales.

At the heart of this dispute is a hefty counterclaim lodged by Sports Entertainment Media BV and its associated parties, including the Singels family and former executives Melvin Bostelaar and Robert Kooiman. They are challenging Entain’s claim that BetCity.nl, a prominent online betting platform, was overvalued by €156m due to undisclosed regulatory investigations during its acquisition. The counterclaimants argue that Entain was fully aware of the compliance probes by Kansspelautoriteit, the Dutch gambling authority, throughout the M&A process.

Understanding the disagreement

This legal tussle revolves around the initial agreement in 2022, where Entain agreed to purchase BetEnt BV, the parent company of BetCity.nl, for an impressive €850m¹. The acquisition was structured with a €300 million upfront cash payment complemented by performance-based incentives totalling €550 million, contingent upon BetCity.nl achieving an EBITDA tenfold its value in the fiscal year 2023.

However, the plot thickened when BetCity.nl was slapped with a €3 million penalty for significant non-compliance issues, leading Entain to allege that these infractions were intentionally hidden by the sellers. The counterclaim asserts that Entain’s subsequent operational changes, deemed unnecessary by Sports Entertainment Media BV, led to a revenue shortfall and a compromised valuation, depriving the former owners of their rightful performance rewards.

As the High Court gears up to adjudicate this high-profile case, the outcome will undoubtedly have far-reaching implications for both parties and the broader corporate landscape. The verdict will not only determine the fate of the €104 million counterclaim but also set a precedent for future M&A disputes in the volatile world of online betting.