Flutter Entertainment Plc has this morning announced that it has secured definitive terms to acquire Italian gambling group Sisal for a consideration of €1.9 billion (£1.62bn).
An agreement has been reached with US private equity fund CVC Capital – the current owner of SIsal – which will see the Italian market leader in online and lottery verticals transferred to Flutter’s control by the second quarter of 2022.
Prior to this morning’s announcement, CVC were preparing to list Sisal on the Milan Borsa, taking its previous €1 billion Italian gambling investment public.
FTSE100 gambling group Flutter has outlined a number of ‘strategic outcomes’ achieved via the acquisition, with the merger significantly strengthening its Italian market position by establishing a market share of 20% in combination with Betfair and PokerStars.
The company further highlighted that the COVID-19 pandemic has seen Italian GGR double from 10% in 2019 to 20% in 2021 – making the sector the second largest in Europe after the UK – although acknowledging that online penetration rates are ‘well below’ the UK and Australia.
However, increased consumer migration from retail to online verticals as a result of COVID-19 lockdowns could offset this commercial hurdle, whilst the overall national market is predicted to reach £3.6bn by 2024, equating to forecast 5-year compound annual growth of 18%.
Updating investors, Flutter Group CEO Peter Jackson outlined the firm’s intent to attain “Italy’s gold medal position” acquiring the heritage operator that is charged with stewarding Italy’s SuperEnalotto lottery.
“For some time we have wanted to pursue this market opportunity via an omni-channel strategy and this acquisition will ideally position us to do so.” – Jackson’s statement read.
“Sisal has grown its online presence significantly in recent years, aided by its proprietary platform and commitment to innovation. I’m excited to see how Flutter can complement these capabilities through our scale, differentiated products and operational capabilities. We look forward to welcoming Francesco and the rest of the Sisal team to Flutter in 2022.”
The gambling group also hopes that Sisal’s omni-channel offering will also provide a significant boost to its Italian-facing operations, delivering a ‘competitive advantage’ in the face of strict advertising restrictions, the prevalence of cash deposits and withdrawals through retail.
Additional Italian holdings include a total of 1,700 Sisal outlets and 40,000 concession points/points of sale, whilst Sisal maintains an average monthly customer base of 300,000.
Further product diversification has been identified as a key objective in Flutter’s acquisition of Sisal, with the company highlighting Sisal’s international growth outside of the domestic Italian market via its lottery operations, which are projected to generate EBITDA of £22m EBITDA by the conclusion of this year.
Of significance, Flutter governance targets an Italian marketplace in regulatory flux as gambling regulator ADM has outlined its intent to halve the market-field size by 2023.
Flutter’s deal statement made no mention of Sisal’s ambitions to become the new operating company the National Lottery, in which the Italian incumbent is participating in the UK government’s Fourth lottery competition.
Although primarily focusing on the Italian market, Flutter’s acquisition of Sisal could present further opportunities in the UK sector should Sisal emerge triumphant in the bidding contest, albeit against tough competition in incumbent licence holder Camelot and international lottery operator Allwyn.
“Through our commitment to digital innovation, international expansion and safer gambling, we have achieved a leadership position in Italy’s online gaming market and developed our global footprint by winning lottery tenders in Morocco and Turkey.” – said Francesco Durante, Sisal Chief Executive.
“We are delighted to join Flutter and are convinced that through its scale and operational capabilities, we will be able to further strengthen our leadership in the markets we operate in. I look forward to working with Peter and the team on the next chapter of Sisal history.”
2021 directives have seen Flutter diversify its product mix and commercial pipeline, away from its traditional betting and gaming channels. This November the FTSE firm acquired leading online bingo room and soft games operator Tombola for £400 million.
Undertaking back-to-back buyouts, Flutter governance will likely face a close examination of its market make-up by the UK Competition and Markets Authority (CMA) as its portfolio will be composed of the leading brands of Sky Bet, Betfair, Paddy Power, PokerStars, Tombola and a bid to operate the National Lottery.