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888 has completed its strategic review of US B2C operations and has reached an agreement to sell selected assets to Hard Rock Digital. 

The decision follows a series of strategic moves by 888, including plans to rebrand as evoke plc and a commitment to focus on its primary markets.

Earlier in March, the company initiated a thorough review of its US B2C operations, exploring various avenues to boost business value. 

During this time, 888 said it was considering options such as selling all or part of its US B2C business, gradually phasing out US operations, or pursuing other strategic transactions. 

Additionally, it was announced that the operator had severed ties with Sports Illustrated (SI).

While 888 has not disclosed the value of the deal nor which specific assets will be sold, it currently operates in four US states: Michigan, Colorado, Virginia, and New Jersey. 

In New Jersey, the 888 brand is exclusively available through 888casino. 

Under the Sports Illustrated (SI) brand, 888 operates SI Sportsbook and SI Casino in Michigan, and SI Sportsbook in Colorado and Virginia.

Hard Rock Digital, in which Playtech maintains a minority ownership, operates as the online gaming and sports betting division of Hard Rock International and Seminole Gaming.

There have been previous reports suggesting that Playtech was in discussions to acquire the entirety of 888.

Deal to be completed by Q4 2024

Under the terms of the agreement with Hard Rock Digital, the transaction will be executed in multiple phases, with the final completion slated for Q4 2024.

It is subject to certain conditions, including regulatory approvals.

888 has commenced a controlled exit of its remaining US B2C operations, with the intention of fully ceasing operations by the end of 2024, subject to regulatory approvals and process. 

The exit is anticipated to yield a recurring annualised benefit of approximately £25m to adjusted EBITDA starting from 2025, with around £10m earmarked for reinvestment in growth initiatives.

However, the transition is not without costs, as 888 anticipates one-off cash expenditures of approximately £40m related to the US exit, spread over the period from 2024 to 2029, including the termination fee for brand licensing.

888 said the financial ramifications of the sale and exit strategy have been factored into the group’s previously announced financial targets.

With revenue for Q1 2024 projected to range between £420m and £430m, the company has set its sights on 5% to 9% revenue growth for full-year 2024.

888 is also aiming for a leverage ratio below 3.5x by the end of 2026 and plans to grow its adjusted EBITDA margin by 100 basis points per year.

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