Codere shareholders consider whole-company or divisional sale

The investment funds that control Codere are reportedly studying alternatives for selling the group. Finding a buyer for the whole company reportedly remains the priority. Selling the businesses separately is reportedly gaining weight because of interest in some of the divisions.

Codere's shareholders are reportedly weighing a sale of its three main areas of activity. The first is Europe, which covers Spain and Italy. The second is Latin America, where Codere operates in Argentina, Mexico, Panama, Colombia and Uruguay. The third is the online business, whose subsidiary is listed on the US Nasdaq. A sale by parts would reportedly allow the interest each unit attracts among potential buyers to be explored.

Codere reportedly hired Jefferies and Macquarie Capital early in the year to look for a new shareholder. The process is reportedly led by around 56 investment funds. Davidson Kempner is the most prominent of them, with 20.37% of the capital. It is followed by Soros Fund (9.14%), System 2 Capital (8.36%), Deltroit (7.5%) and Astaris (6.71%).

The Argentine business and a tax contingency in Mexico are reportedly complicating some buyers' interest in the whole group.

Cirsa had reportedly submitted an indicative offer for Codere during the summer. Its recent integration with Lottomatica has reportedly altered that possibility. Cirsa could submit a binding offer for all of Codere or for some of its units. The final decision reportedly now rests with the Italian group, which has taken strategic control of the operation.

Latin America accounts for 49% of revenue and 54% of adjusted EBITDA, according to the report. Europe contributes 36% of revenue and 34% of operating result. The online business represents 15% of revenue and 16% of EBITDA. Spain contributes roughly 16% of revenue but is the market that adds most to adjusted EBITDA, at 25%, ahead of Argentina (19%) and Mexico (17%). Italy is currently the largest market by revenue at 20%, followed by Argentina (17%) and Spain (16%).

In a hypothetical sale of the whole company, Codere could be valued at around €2,000m. Its Nasdaq-listed online subsidiary currently has a market capitalisation of close to 400 million. Potential interested parties reportedly also include US private equity funds and industry groups from the United States, Austria and Germany.

According to the report, the outcome will depend on how the process develops and on whether shareholders see more value in a joint sale or in selling the main businesses individually.