Flutter agrees to acquire Playtech’s Italian unit Snaitech for €2.3 billion

Flutter Entertainment is set to become Italy’s largest gambling operator after agreeing a €2.3bn acquisition of Snaitech from FTSE 250-listed Playtech.

The deal, expected to be completed in the second quarter of next year, will increase the Paddy Power owner’s share of Europe’s largest regulated betting market to 30 percent and add an additional €946.6 million in annual revenue on last year.

Snaitech, operating under the name Snai, is one of Italy’s largest online and retail sports betting companies, serving an average of 291,000 monthly players across 2,000 locations.

Flutter, which also owns FanDuel, expects the deal to generate operating cost synergies of “at least” €70 million along with “incremental revenue synergies.”

He noted that Italy’s €21 billion market is a growth opportunity, with online penetration at just 21 percent, compared with levels exceeding 60 percent in the UK and Australia.

Flutter boss Peter Jackson said the deal was “strategically and financially attractive.”

This follows Flutter’s announcement last week that it would enter the newly regulated Brazilian market with the purchase of a 56 percent stake in NSX Group for around $350 million.

Flutter said it expects the deal to increase its debt, which stood at $5.5 billion as of June 30, but is then expected to “reduce rapidly given the highly visible profitable growth opportunities that exist across the board.”

Jackson added: “It fits perfectly with our value-creating M&A strategy and creates 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.”

Flutter Actions rose 1 percent to 17,055 pence in early trading, while Playtech shares added 0.1 percent to 754p.

Playtech agrees to extraordinary dividend and its executives prepare to receive a payment of 100 million euros

Playtech executives on Tuesday welcomed the deal, which they said reflected a valuation of £6.27 per Playtech share, a 16.5 percent premium to its pre-bid value.

The sale represents a significant gain for Playtech, which initially acquired Snaitech in 2018 for an enterprise value of €846 million.

Since then, Snaitech’s earnings before losses have increased from €139.3 million in the year ended December 31, 2017 to €256.1 million last year.

The sale of Snaitech means Playtech will operate as a purely business-to-business software provider, which the group says would “enhance its market-leading technology, positioning it to further grow its customer base and expand its share of wallet with existing customers.”

The sale will also be a big payout for Playtech shareholders, who can look forward to a special dividend of between €1.7 and €1.8 billion “as soon as possible.”

The bonuses mean Playtech’s chief executives will also share a maximum total payout of €100m, with CEO Mor Weizer taking the biggest cut.

Weizer said: ‘While Snaitech has been an important part of the growth of the Playtech Group in recent years, the Board agreed that this transaction represents a compelling opportunity to maximise value for our shareholders whilst allowing them to share in further benefits from continued ownership of a leading B2B business.

‘The combination of Playtech Group’s leading technology with its exposure to attractive markets, including those in the Americas and Europe, provides a strong platform for medium-term growth.

“With Flutter, Snaitech will have a new owner with a presence in Italy and all the opportunities that this brings. I am confident that Snaitech will continue to excel under their management.”