Integration Risks Loom as BlueBet Acquires TopSport in Strategic $10M Asset Deal

Strategic Acquisition to Expand Market Footprint

BlueBet Holdings Ltd (ASX: BBT) has entered into a binding asset sale agreement to acquire key assets of TopSport, an Australian sports and racing betting operator. The transaction, announced on 5 February 2025, involves a $10 million upfront payment, split 70% in cash and 30% in BlueBet shares, with additional earn-out and performance-based payments contingent on future results.

This acquisition is a clear step towards BlueBet’s ambition to capture a 10% to 15% share of the Australian wagering market. TopSport’s customer base, comprising approximately 11,300 active customers and generating $198.9 million in turnover for H1 FY25, will significantly enhance BlueBet’s scale and market presence.

Financial and Operational Synergies

BlueBet expects the acquisition to be highly earnings accretive, projecting over 30% pro-forma earnings per share accretion in FY26 and FY27. The deal structure is designed to align incentives, with earn-out payments based on net gaming revenue (NGR) from TopSport customers over three years, and performance options tied to revenue milestones.

Importantly, BlueBet will leverage its proprietary technology platform, including a personalised promotion engine, to enhance customer engagement and improve TopSport’s net win margin, which currently stands at 5.9%. The migration of TopSport customers to BlueBet’s platform is anticipated to drive margin uplift above 10%, supported by superior trading capabilities and promotional efficiency.

Equity Raising to Support Growth and Integration

To fund the cash component of the upfront payment and support working capital and growth initiatives, BlueBet is undertaking an institutional placement to raise approximately $15 million. The placement involves issuing around 44.1 million new shares at $0.34 each, representing a modest premium to recent trading prices.

The equity raise underscores BlueBet’s commitment to a disciplined capital strategy, balancing acquisition funding with ongoing investment in technology and customer acquisition. The company’s recent performance, including delivering EBITDA positive results half a year ahead of schedule, provides a strong foundation for this next phase of growth.

Leadership and Integration Risks

BlueBet will retain key TopSport personnel, notably Tristan Merlehan, who will join as Chief Trading Officer, strengthening BlueBet’s leadership in pricing, risk, and trading. This retention is critical to maintaining continuity and leveraging TopSport’s deep industry expertise.

However, the success of the acquisition hinges on effective integration and customer migration. Risks include potential delays, unforeseen liabilities, and the challenge of realising anticipated synergies. BlueBet has acknowledged these risks and outlined escrow arrangements and non-compete clauses to mitigate potential disruptions.

Market Position and Future Outlook

With this acquisition, BlueBet moves closer to a strategically significant market share, enhancing its competitive position against larger incumbents. The combination of TopSport’s customer base and BlueBet’s technology platform is expected to drive sustainable profitability and support further industry consolidation.

Investors should watch closely how BlueBet manages the integration process and capital deployment in the coming months, as these will be key indicators of the acquisition’s ultimate success.