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(Alliance News) - Sisal is a plant fibre used to make hard-wearing floor coverings. Flutter Entertainment PLC hopes to spin that straw into "gold" in the Italian gaming market.
The Dublin-based gambling operator, formerly known as Paddy Power Betfair, said on Thursday it has acquired online gaming firm Sisal from CVC Capital Partners Fund for EUR1.91 billion, around GBP1.62 billion, in a bid to establish "a gold medal position" in the Italian market.
Flutter said the transaction is likely to complete during the second quarter of 2022 and is expected to be accretive to adjusted earnings in the first 12 months after completion.
The acquisition will give Flutter an 20% share of Italy's online gambling market when combined with its PokerStars and Betfair brands.
In Italy, Flutter will face a familiar UK rival that has agreed to be taken over by a large Australian firm. Playtech PLC owns Snaitech, an omni-channel gambling operator in Italy. Back in October, Playtech agreed to a GBP2.1 billion takeover from Sydney-listed Aristocrat Leisure Ltd.
Flutter said it will pay cash for Sisal which will include the full repayment of Sisal's debt. Flutter has agreed additional debt facilities with Barclays Bank PLC to finance the acquisition.
Sisal is a Milan-based betting, gaming and lottery operator.
In 2021, Flutter said Sisal expects to generate earnings before interest, tax, depreciation and amortisation of EUR248 million, with 58% coming from its online offering and the remainder coming from a combination of retail and lottery operations. Sisal expects to report revenue of EUR694 million in 2021.
Flutter said the acquisition will increase the company's exposure in Italy which it added was Europe's second largest regulated gambling market. About 90% of Sisal's 2021 Ebitda has come from Italy, with remainder from regulated lottery operations in Turkey and Morocco.
Flutter Chief Executive Officer Peter Jackson commented: "I am delighted to add Sisal, Italy's leading gaming brand, to the group as we look to attain a gold medal position in the Italian market. 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. 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."
Shares in Flutter were up 1.7% at 11,500.00 pence on Thursday afternoon in London, the fifth best performer in the FTSE 100 index.
Davy Research commented that Flutter's acquisition of Sisal offers several revenue synergies and a runway for further growth.
"The acquisition also serves as an important reminder of the global online market opportunity and how Flutter is one of only a handful of operators that can credibly look to compete and win across this exciting multi-jurisdictional industry," Davy said.
In addition to its European and Australian operations, Flutter owns the FanDuel brand in the US.
By Heather Rydings; heatherrydings@alliancenews.com; and Tom Waite; thomaslwaite@alliancenews.com
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