BlueBet Raises $15M to Acquire TopSport, Targets 30% EPS Boost

Strategic Acquisition to Expand Market Footprint

BlueBet Holdings Limited (ASX: BBT) has taken a decisive step to consolidate its position in the Australian online wagering market with the acquisition of key assets from TopSport. The deal, announced on 5 February 2025, is designed to be significantly earnings accretive, with management projecting over 30% earnings per share (EPS) accretion in both FY26 and FY27. This acquisition aligns with BlueBet’s strategic ambition to capture a 10% to 15% market share 'sweet spot' in Australia, leveraging TopSport’s established customer base and brand.

The acquisition is structured as an asset sale, enabling BlueBet to selectively acquire TopSport’s customer database, brand, intellectual property, material contracts, and select employees, while excluding other liabilities. This focused approach minimizes risk and ensures BlueBet only assumes assets that directly contribute to growth and profitability.

Funding the Deal: $15 Million Equity Raising

To finance the acquisition, BlueBet is undertaking an institutional placement to raise approximately $15 million through the issuance of around 44.1 million new shares at $0.34 each. This price represents a modest premium to recent trading prices, signaling investor confidence in the strategic rationale behind the deal. The proceeds will cover the cash portion of the upfront payment to TopSport, integration and migration costs, working capital, and further growth initiatives.

The equity raising is not subject to shareholder approval, expediting the transaction timeline. Settlement of the placement shares is scheduled for mid-February 2025, with completion of the acquisition anticipated in April 2025, contingent on regulatory approvals and successful customer migration.

Enhancing Operational Capabilities and Synergies

TopSport, operated by the Merlehan family with over 50 years of combined bookmaking experience, recorded a $198.9 million turnover and $11.8 million net win in the first half of FY25, with a net win margin of 5.9%. Its customer base is skewed towards sports wagering, complementing BlueBet’s existing portfolio and offering material revenue synergies on the betr platform.

Importantly, there is limited customer crossover between the two companies, with only 33% of TopSport’s net win coming from customers also active with BlueBet. This suggests significant potential for cross-selling and wallet share expansion. BlueBet’s proprietary technology platform, including its personalised promotion engine, is expected to drive margin improvements and enhance customer engagement post-integration.

Tristan Merlehan, TopSport’s CEO, will join BlueBet’s executive team as Chief Trading Officer, bringing his expertise to strengthen risk and trading capabilities. This leadership continuity is a strategic move to ensure smooth integration and sustained margin improvement.

Transaction Structure and Future Incentives

The total consideration includes a $10 million upfront payment (70% cash, 30% scrip), deferred earn-out payments based on net gaming revenue (NGR) from TopSport customers over three years, performance-based options, and potential bonus payments linked to BlueBet’s share price milestones. This structure aligns vendor incentives with BlueBet’s long-term growth and profitability objectives while mitigating upfront risk.

Regulatory approvals from the Northern Territory Racing Commission and the Greyhound Welfare and Integrity Commission remain key conditions precedent, alongside the successful equity raising and customer migration. The deal excludes non-core liabilities, further protecting BlueBet’s balance sheet.

Outlook and Market Implications

BlueBet’s acquisition of TopSport represents a clear commitment to inorganic growth through a repeatable M&A model aimed at consolidating the fragmented Australian wagering market. The transaction builds on the momentum from BlueBet’s recent merger with betr, positioning the combined entity as a formidable competitor with enhanced scale, technology, and customer reach.

Investors will be watching closely as BlueBet executes the integration and begins to realise the anticipated synergies. The company’s ability to convert increased net gaming revenue into EBITDA and earnings growth will be critical to validating the strategic rationale and justifying the equity raise.