SBC News Voice of the Sports Betting Industry
Flutter Entertainment has reached definitive terms with Playtech Plc to acquire Snaitech SPA for €2.3bn, aiming to take the “gold medal podium position” in Italian gambling.
This morning, the boards of Flutter and Playtech notified markets that an all-cash offer of €2.3bn had been accepted for Snaitech, the Italian market’s third-largest online gambling operator, with a market share of 9.9%.
Last August, Playtech confirmed to the media that it had entered negotiations with Flutter, stating it would only consider a bid above €2bn to sell its flagship B2C unit to the NYSE/LSE rival.
Securing Flutter’s new M&A target, Group CEO Peter Jackson commented: “I am delighted to announce the acquisition of Snai, one of the leading players in Italy, Europe’s largest regulated market. This transaction is compelling both strategically and financially.”
The acquisition further strengthens Flutter’s growth strategy in Italy, which is considered by the NYSE/LSE group to be Europe’s fastest-growing gambling market, with an estimated Gross Gaming Revenue (“GGR”) of €21bn in 2023.
Of strategic significance, the Italian market maintains a low online penetration of 21%, which Flutter International seeks to capitalise on through its tier-1 portfolio, including Betfair.it, Sisal (betting and lotteries), and the new addition, Snaitech.
As detailed to investors: “Greater digital adoption is expected to drive online market growth at a compound rate of approximately 10% over the next three years. Local advertising restrictions and the prevalence of online deposits/withdrawals via retail outlets provide omni-channel operators with an opportunity to maximise growth.”
Post-acquisition, Flutter International will hold a 30% market share in Italy’s online gambling market after combining Snai with its existing business.
Flutter will once again deploy its EDGE programme to enhance and align Snaitech’s operating systems with new capabilities across pricing and risk management, in-house casino content, and operational platforms. The aim is to target synergies and cost savings of €70m over a three-year period.
Flutter’s leverage ratio is expected to rise temporarily following the transaction, but it is anticipated to decrease rapidly due to profitable growth in Italy’s online market.
Leadership remains committed to maintaining a medium-term leverage target of 2.0-2.5x, following the subsequent M&A of Snaitech and the $350m investment in Betnacional – a deal announced last week as the NYSE/LSE group’s first investment in Brazil forthcoming gambling market.
Peter Jackson concluded: “The deal fits perfectly within our strategy for value-creating M&A and presents a significant opportunity to accelerate Snai’s growth by providing them with access to Flutter’s market-leading products and capabilities, both in the US and globally.”
“I look forward to welcoming the Snai team to the Flutter Group and working with them to maximise the growth opportunity for our combined businesses.”
Playtech responded by stating that it had secured peak value in the sale of Snaitech, as the cash consideration represents £6.27 per share, a 16.5% premium over Playtech’s share price of £5.38 before the deal was leaked. Flutter’s cash offer of €2.3bn represents a 9x multiple of Snaitech’s FY2023 Adjusted EBITDA of €256m.
The deal will conclude with Playtech returning a special dividend to shareholders of £1.7bn to £1.8bn, with the reward expected to range between £4.56 and £4.83 per share.
Part of the proceeds from the sale will be used to repay a €350m bond from 2019, strengthening Playtech’s financial position for future growth.
Playtech brands the €2.3bn cash sale of Snaitech as its best M&A achievement, having acquired a 70% stake in the Italian operator in 2018 for €300m. “An almost three-fold return on Playtech’s acquisition of Snaitech for €846m in 2018.”
Moving forward, Playtech will return to primarily operating as the leading B2B technology supplier for global gambling, actively seeking opportunities in the Americas and Europe.
