Flutter to buy Italian gambling operator Sisal for £1.6bn
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Paddy Power owner Flutter takes 'gold medal position' in Italy after agreeing £1.6bn deal to buy gaming operator Sisal
Sky Bet and Paddy Power owner Flutter Entertainment has agreed to buy Italy's largest online gaming company from CVC Capital Partners in a £1.6billion deal.
It hopes the purchase of Sisal will help it take advantage of Italy's fast-growing digital gaming market, which is forecast to be worth £3.6billion by 2024 and has already doubled its share of revenue over the last two years.
Flutter's PokerStars and Betfair brands already have a presence in Italy, but the FTSE 100 group said that the takeover 'secures a gold medal position' as it will control a 20 per cent share of the country's online gaming market.
Expansion plans: Flutter hopes the purchase of Sisal will help it take advantage of Italy's fast-growing digital gaming market, which is forecast to be worth £3.6billion by 2024
Sisal's web-based revenues have surged by an average 34 per cent over the last five years, and it forecasts generating revenues of £590million and underlying earnings of £211million this year.
As well as betting, casino and amusement machines, the business has operated Italy's popular SuperEnalotto lottery since 1997 and holds the tender for the Moroccan national lottery.
It is also in competition to run the UK National Lottery from 2023 and has set up an advisory board to assist in this bid, including names like Baroness Karren Brady, former Asda boss Andy Clarke and ex-Minister of Culture Ed Vaizey.
Flutter chief executive Peter Jackson said: '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.'
The Milan-based gambling operator has only 300,000 average monthly online users compared to 9.5 million retail customers, but Flutter expects many of them to start using their online brands.
Jumping ahead: Flutter also owns bookmaker Betfair, which has a strong presence in Italy
Internet gambling has boomed during the coronavirus pandemic due to the imposition of temporary restrictions on non-essential businesses meaning punters have sometimes been unable to place wagers in betting shops or visit casinos.
Yet despite how much this has benefitted the Italian digital gaming market, only 20 per cent of its revenues originate online compared to approximately 60 per cent and 70 per cent in the UK and Australian markets, respectively.
Shares in Flutter Entertainment were 4.7 per cent higher at £118.40 at around 10:45am on Thursday, making it the top riser on the blue-chip Footsie index, but their value has still declined by around a quarter in 2021.
Victoria Scholar, the head of investment at Interactive Investor, said: 'The betting and gaming sector has been awash with M&A activity in recent years, with inorganic growth a key strategy that Flutter has done well to embrace.'
She added: 'After a 200 per cent surge after the first quarter covid-driven sell-off last year, the stock has been struggling to maintain further upward momentum with shares shedding 25 per cent so far this year.
'However December’s price action is looking more promising with a revival off the lows and today’s sharp jump, potentially paving the way for more near-term positivity.'
