Flutter Entertainment has agreed to acquire Italy-facing omnichannel operator Snaitech from Playtech for a total enterprise value of €2.30bn (£1.94bn/$2.56bn).
Announced this morning (17 September), the deal will see Flutter take 100% ownership of the Snaitech business. The agreement is expected to complete by Q2 of next year.
Confirmation of the acquisition comes amid weeks of speculation that Flutter would seek to purchase Snaitech. Reports yesterday (16 September) suggested that a deal was close.
Why is Flutter buying Snaitech?
Setting out its reasons for the purchase, Flutter said it aligns with its strategy to “invest in leadership positions” in international markets.
Flutter said the addition of Snaitech will expand its Italian operations, which already include PokerStars, Betfair and Tombola. The operator also acquired Sisal in 2021. The deal strengthens its competitive position in the “fast growing” Italian market, Flutter said.
Snai adds to Flutter’s ‘local hero’ brand portfolio. This comprises operators with leading position presences in their local markets including Brazil’s Betnacional. Flutter acquired a 56% stake in its parent company NSX Group last Friday (13 September).
It is Italy’s number three online operator, with a 9.9% market share in 2023 based on data from local regulator ADM, with 291,000 average monthly players.
In Playtech’s 2023 fiscal year Snai generated €947m in regulated revenue and adjusted EBITDA of €256m, of which 50% was generated online.
A strong retail presence complements its online operations. Snai runs 2,000 points of sale across Italy. It is Italy’s second largest retail betting operator with 19% market share and the country’s second largest retail gaming business with a 14% share.
Flutter expects €70m in cost synergies within three years
Furthermore Flutter believes its Flutter Edge approach provides an opportunity to drive cost and revenue synergies. Flutter Edge essentially reflects the global scale of the business and the access to talent, technology, product and capital that provides.
Operating cost synergies are expected to be approximately €70.0m and achieved within three years of completion.
Snaitech will benefit from access to Flutter Edge capabilities across pricing and risk management and in-house casino content, Flutter said. This will benefit Snaitech customers and improve their overall gambling experience.
The transaction remains subject to merger control clearance and other customary regulatory clearances. Flutter will be providing more information about the deal during its investor day on 25 September.
Flutter CEO welcomes “compelling” acquisition
Speaking about the acquisition, Flutter CEO Peter Jackson said he is delighted to reach an agreement. The deal will help accelerate Snaitech’s growth in the long term he said.
“This transaction is compelling strategically and financially,” Jackson said. “It fits perfectly within our strategy for value creating M&A. It 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.
“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’s focus shifts back to B2B
For Playtech the deal represents a threefold return on its initial €846m investment in acquiring Snaitech in 2018. It previously explored a sale in 2022, around the time an approach by Aristocrat to acquire Playtech was floundering. Those plans were shelved, however, amid improving trading conditions.
Playtech will now switch focus back to its technology-led offering in B2B markets, it said in a statement this morning.
This “simplified” business model and focused B2B strategy will allow Playtech to improve its technology, grow its customer base and expand its share of wallet with existing customers.
In addition, Playtech described the sale as a “large value creation event” for shareholders. It will pay a special dividend of between £1.7bn and £1.8bn to shareholders, equating to £4.56-£4.83 per share.
Snaitech has been an important part of the group’s growth in recent years, CEO Mor Weizer said. However the transaction represents a “compelling opportunity” to maximise value for shareholders.
Weizer talks up Playtech prospects
“Under the Playtech Group’s ownership, Snaitech has grown into a high-quality business with a leading position in the Italian sports betting and gaming market,” Weizer said.
“The business has an experienced and high-performing management team that has fully embraced the post-lockdown shift to omnichannel in Italy. Today, Snaitech has an established retail presence and online business that are both well-placed to continue their success in one of the most attractive markets in Europe.”
The supplier’s technology, coupled with exposure to attractive markets in the Americas and Europe provides a strong growth platform in the medium-term, Weizer added.
The deal comes after Playtech yesterday (16 September) announced a revised strategic agreement with Mexico-facing operator Caliente. The new arrangement ends a long-running dispute over the companies’ Caliplay joint venture.
Shares in Flutter Entertainment closed up 1.30% at $224.34 in New York yesterday (16 September). Playtech shares hit a 52-week high of 769p per share in early trading this morning.
