Lottomatica's CEO, Guglielmo Angelozzi, referred to the merger with Cirsa as a "low-risk proposition" during an investor call on Wednesday, which laid out the details of the significant partnership. The merger is poised to create the second-largest listed global gaming and sports betting operator, projecting a pro forma adjusted EBITDA of around €2 billion ($2.3 billion).
Angelozzi, who will lead the newly formed entity, expressed confidence about the transaction's low-risk profile, citing consistent growth trends for both companies. He noted that Lottomatica and Cirsa have achieved compound annual growth rates (CAGRs) of 13% and 11% in revenue, respectively, from the first half of 2024 to the first half of 2026.
He stated, "The combined entity will be able to deliver the same rate of growth and the same rate of shareholder distribution, but with a larger pro forma free float and liquidity. You get the same stable and predictable growth and you get the capital returns. You get no additional risk, and you get the benefits of the new markets and the online opportunities on top of the synergies, which are also pretty significant. So that’s why this makes a lot of sense to us."
Cirsa's CEO, Antonio Hostench, supported this sentiment, describing the merger as a major opportunity that presents minimal risk due to the lack of overlap between the two companies. He remarked, "We see this as a great opportunity because as Guglielmo said, there is no overlap between the companies, almost no overlap. We’re creating one of the biggest groups in the world in gaming terms."
Under the terms of the EU cross-border merger, Lottomatica will consolidate Cirsa, becoming the surviving entity. When questioned about past cross-border mergers and their failures to meet expectations, Angelozzi pointed out that Cirsa is already a well-managed company. He explained, "In this case, it’s a completely different situation. You have a group, not a single company in a single country, a group which has been a solid group for 10 years and delivering. There’s no turnaround to be made. It’s already very well managed. It’s number one in its markets."
The newly formed organization will list stock in both Spain and Italy, the markets where both companies currently lead. In the first half of this year, Italy accounted for 57% of the combined group's pro forma adjusted EBITDA, while Spain accounted for 23%. Post-merger, it is anticipated that 80% of the company's EBITDA will derive from the two regions.
The investor deck indicates that online betting and gaming will emerge as the largest segment for the combined entity, making up 48% of the pro forma adjusted EBITDA in the first half of this year. Following that, distributed gaming accounted for 27%, and casinos contributed 25%.
Angelozzi highlighted Spain and Italy as premier markets for growth in online gaming. He identified Cirsa's estimated 6% share of the online market in Spain, suggesting its characteristics are more fragmented and underdeveloped compared to Italy's.
"These two markets have been growing and will continue to grow very nicely; Spain even more than Italy," he analyzed.
Describing Cirsa's capabilities, he noted, "Cirsa has incredible knowledge of the market and consumers, along with a strong retail platform that can be utilized for online gaming."
With Cirsa also maintaining a presence in Italy, concerns about regulatory issues were raised. However, Angelozzi reassured stakeholders, stating, "On the Italian antitrust, we don’t think we are in a risky situation because Italy is not the core of this deal and this doesn’t change the level of concentration in the country and will still be below 40% in each relevant market. We do not expect revenue attrition. These are complementary brands and complementary models."
He emphasized that the merger would facilitate their ongoing management of a multi-brand business model in Italy, where they already operate several complementary brands.
Kyle Goldsmith has been with Clarion since December 2023, transitioning from sports journalism to become a senior reporter focused on LatAm for iGB.
