French Government Mulls FDJ Privatization

12 September 2008

Merrill Lynch, the American financial services behemoth, has been appointed financial advisor to the French national lottery La Française des Jeux, pending a government decision on whether to sell a portion -- or all -- of its 72 percent stake.

The news came yesterday as Christophe Blanchard-Dignac, who heads the company, spoke at a press conference on the launch of a new game.

La Française des Jeux -- known in the foreign media as FDJ -- has on offer a suite of games that includes the Euromillions European lottery, and reported sales of 9.3 billion euros in the 2007 fiscal year.

Les Echos, a French newspaper, has speculated the French government will proceed with FDJ's privatization via an initial public offering sometime in 2009.

Lagardère S.C.A., a French media, retail and aerospace company, is rumored to be a potential investor, while Bouygues S.A., one of Europe's largest construction companies, and Vivendi S.A., a French media conglomerate, are rumored to be interested in FDJ's online activities.

According to efinancialnews.com, the online arm of London's The Financial News, Merrill has worked just two large French I.P.O.s in the last five years.

Last April, it took Rexel, an electrical equipment and distribution company, to market in a $1.5 billion float alongside BNP Paribas, Calyon, JPMorgan and Lehman Brothers Holdings.

Its other float of note was the $1 billion listing of Eutelsat, the satellite communications company, which it managed alongside Goldman Sachs, Deutsche Bank, Lehman Brothers and Morgan Stanley.

The FDJ privatization comes as the country is set to liberalize its hitherto monopolistic market on Internet gambling.

On pressure from the European Commission -- and after a series of high-profile arrests -- the French government has agreed to begin licensing online betting and gaming operators from autumn 2009.

The conditions set out in the government's so-called "controlled opening," however -- including license-eligibility criteria and a tax scheme -- have yet to be concretized.

"All we know for sure is that in [the fall] of this year the French government will submit a draft proposal to the Parliament that the Parliament will be required to adopt by June 2009 for creating the first licenses in September 2009," Thibault Verbiest, a Paris lawyer specializing in gambling law, told IGamingNews in June.

"This is the wish expressed by (President Nicolas) Sarkozy. Everything else is speculation, bargaining and debate between the government and the monopoly," he added.

A time frame on the government's decision to sell its stake in FDJ, to IGN's knowledge, has not been publicized.




Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.