Flutter Entertainment is set to become Italy's biggest gambling operator after agreeing the €2.3billion takeover of FTSE 250-listed Playtech's Snaitech.
The deal,which is expected to be completed in the second quarter of next year,will build the Paddy Power owner's share of Europe's largest regulated betting market to 30 per cent and add an additional €946.6million in annual revenues as of last year.
Snaitech,which trades under the name Snai,is one of Italy's biggest sports betting companies across online and retail,and boasts 291,000 average monthly players across 2,000 locations.
Takeover: Italy is the largest regulated betting market in Europe,but weak online penetration suggests a strong growth opportunity
Flutter,which also owns FanDuel,expects the deal to deliver operating cost synergies of 'at least' €70million along with 'incremental revenue synergies'.
It noted that the €21billion Italian market is a growth opportunity,with online penetration of just 21 per cent compared to levels exceeding 60 per cent in the UK and Australia.
Flutter boss Peter Jackson said the deal was 'compelling strategically and financially'.
It follows Flutter's announcement last week that it would enter the newly-regulated Brazilian market with the purchase of 56 per cent stake in NSX Group for around $350million.
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ShareFlutter said it expects the deal to increase its debt pile,which sat at $5.5billion as of 30 June,but this is then expected to 'reduce rapidly given the highly visible profitable growth opportunities that exist across the growth'.
Jackson added: 'It fits perfectly within our strategy for value-creating M&A 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 shares were up 1 per cent to 17,055p in early trading,while Playtech shares added 0.1 per cent to 754p.
Playtech lines-up bumper dividend while execs set for €100m payday
Playtech bosses on Tuesday welcomed the deal,which they said reflected a valuation of £6.27 per Playtech share - a premium of 16.5 per cent to their value prior to the bid.The sale represents a major profit to Playtech,which initially acquired Snaitech in 2018 for an enterprise value of €846 million.
Since then,it has grown Snaitech's earnings before nasties from €139.3 million in the year to 31 December 2017 to €256.1 million as of last year.
Snaitech's sale means Playtech will operate as a pure business-to-business software provider,which the group said would 'improve 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 mean a bumper payout for Playtech shareholders,who can look forward to a special dividend of €1.7billion to €1.8billion 'as soon as practicable'.
Bonus awards mean Playtech's executive directors will also share a maximum aggregate amount of €100million,with chief executive Mor Weizer set for the largest cut.
Weizer said: 'While Snaitech has been an important part of the Playtech Group's growth in recent years,the Board agreed that this transaction represents a compelling opportunity to maximise value for our shareholders while also allowing them to share in further upside from continued ownership of a leading B2B business.
'The combination of the Playtech Group's leading technology with its exposure to attractive markets,including in the Americas and Europe,provides a strong platform for growth in the medium-term.
'In Flutter,Snaitech will have a new owner with an existing presence in Italy and all of the opportunities that brings. I'm confident that Snaitech will continue to excel under their ownership.'
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