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Kindred Group (OTC: KNDGF) announced Wednesday that it’s leaving the North American market and cutting 300 jobs in a move some industry observers believe could spur a sale of the Swedish gaming company.
The operator said its departure from North America should be completed by the end of the second quarter of 2024. Kindred’s Unibet brand, popular with European bettors, failed to gain traction in the US and lives in just five states — Arizona, Indiana, New Jersey, Pennsylvania, and Virginia. Kindred announced a strategic review in April, and Wednesday’s news serves as an update on that process.
In addition to non-headcount opex savings, Kindred has also addressed its organisational structure with the intent to achieve a leaner and more efficient organisation focused on selective growth initiatives,” according to a statement issued by the firm. “This will include a reduction of over 300 employees (including employees in North America) and consultants during 2024. The cost reduction initiatives are expected to result in annualised gross cost savings (opex and capex) of approximately GBP 40 million ($50.51 million).”
Interim CEO Nils Andén described the cost-cutting moves as “necessary and decisive.” The company added that the moves will allow it to refocus on its core markets.
Kindred Could Be Takeover Target
While Kindred didn’t comment to this effect in Wednesday’s press release, strategic reviews often stoke speculation of a possible sale, which has been the case with the Unibet parent.
In July, reports indicated that MGM Resorts International (NYSE: MGM) and an unnamed UK-based gaming entity could be considering takeover offers for Kindred. While no deal has emerged yet, either party could make sense as a suitor for Kindred.
Speculation of MGM’s interest in Kindred surfaced in May, and it makes sense on multiple levels, with Keith Meister’s Corvex Management being one of the driving forces behind Kindred considering a corporate action. He’s also a director at MGM, which already has a Swedish acquisition via LeoVegas.
Likewise, UK operators such as Flutter Entertainment (OTC: PDYPY) and Entain Plc (OTC: GMVHY) could look to bolster European market share — something buying Kindred could accomplish. Several months ago, rumors surfaced that Kindred held talks with Entain, Evolution AB, and Flutter.
Another One Bites the Dust
With news of Kindred’s plan to exit North America, it’s fair to say the ultra-competitive US sports wagering landscape has claimed another victim.
Since the now-famous 2018 Supreme Court ruling on the Professional and Amateur Sports Protection Act (PASPA), many foreign companies have entered the US sports betting market only to ultimately sell themselves or throw in the towel after failing to gain adequate market share.
To date, the only foreign operators that have noteworthy success in the US are Flutter and Entain, the former by controlling FanDuel and the latter via its 50% stake in BetMGM. Even in those cases, FanDuel and BetMGM are largely viewed as American companies.