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Flutter Acquires Italian iGaming and Online Sportsbook Giant for $2.2B
By Jeff Osienya Dec 26, 2021 IndustryFlutter acquires Sisal Group, the oldest gaming company in Italy, for $2.16 billion as it continues to zero in on a bigger share of Italy’s online gambling market. This deal is projected to double its share of Italian online gaming to about 20%.Flutter Entertainment, the owner of Betfair, Sky Bet, Paddy Power, and PokerStars, has reached a definitive agreement to acquire Sisal Group, Italy’s oldest gaming and lottery operator, for $2.16 billion (£1.62 billion). Flutter will buy Sisal from its parent company CVC Capital Partners Fund VI, in an all-cash deal expected to close in Q2 2022. Financed by debt, the transaction is projected to be accretive to adjusted earnings within the first calendar year.
On the other hand, CVC Capital originally purchased a 100% equity stake of Sisal Group from Apax, Permira, and Clessidra in a transaction valued at $1.1 billion (€1 billion) about five years ago in 2016. In addition, CVC has a strong track record in the global gaming sector through strategic investments in UK-based Sky Bet (sold to The Stars Group for $4.7 billion in 2018) and Germany’s Tipico, along with previous investments in William Hill.
Following the announcement, Peter Jackson, the Chief Executive Officer of Flutter, said:
Quote“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. 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. 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.”
Francesco Durante, the Sisal Group CEO, also chimed in to say:
Quote“Over the last five years, thanks to CVC’s support, we have successfully transformed Sisal into a leading digital and international gaming company. We are delighted to join Flutter and are convinced that through its scale and operational capabilities, we will be able to further strengthen our leadership in the markets we operate in. I look forward to working with Peter and the team on the next chapter of Sisal history.”
The purchase puts Sisal’s value at 7.7 times its earnings before tax, interest, amortization, and depreciation in the year ending December 2021.
Zeroing in On a Bigger Share of the Italian Gaming Market
The Italian market is reportedly one of the largest in the European gaming sector, second only to the United Kingdom, the current market leader in the region. With Sisal’s acquisition, Flutter will now command about 20% of Italy’s online gaming market. Now, the newly purchased firm will supplement Flutter’s Italian presence via the Betfair and PokerStars brands.
In its Italian home market, Sisal mainly provides gaming and betting services through the management of games such as SuperEnalotto, Toptip, and Totocalcio. Flutter’s Betfair and PokerStars brands will now target Sisal’s retail channel, whereas the Italian firm’s casino product will gain access to in-house gaming content from Flutter. The buyout will also complement Sisal’s own Matchpoint platform, a service that will let players wager on over hundreds of thousands of sporting events and horse races.
Moreover, Sisal runs retail and online gaming businesses in Morocco and Turkey and has also recently joined the race to take over from Camelot as the official operator of the UK National Lottery from 2023. The Milan-based company, which currently employs 2,500 people, had been planning an IPO (initial public offering) to get listed on the Millan Stock Exchange before Flutter’s buyout announcement.
The Internet Gaming Challenge in Italy’s Gambling Sector
With its latest purchase, Flutter hopes it will gain an edge in Italy’s rapidly growing online gaming industry, forecast to be worth $4.8 billion (£3.6 billion) by 2024. Meanwhile, the Italian internet gaming sector has seen its share of revenue double since 2018. And through the last five years, Sisal’s internet-based revenue has jumped by an average of 34% annually. Additionally, the Milan-based gaming firm expects to generate about $786 million (~£590 million) in revenue in the 2021 fiscal year, with underlying earnings worth roughly $281 million (~£211 million).
As we speak, Sisal only enjoys a userbase of about 300,000 average monthly users for its online services, which is but a shadow of its 9.5 million retail consumers from a string of 1,700 retail shops. Flutter’s objective following Sisal’s purchase is to covert a significant chunk of the retail customers to its internet-based channels. In 2021, 58% of Sisal’s revenue is expected to come from its online offering, owing to its 12% share in Italy’s internet gaming sector.
Interestingly, despite the advantage that the Coronavirus pandemic posed for internet gambling globally because of restrictions imposed on land-based betting shops and casinos, Italy’s online gambling doesn’t seem to have gained significant traction. To date, only 20% of Italy’s gaming revenue comes from online channels, whereas in the UK and Australian markets, internet gambling brings in about 60 and 70% of the total revenue, respectively. Again, unlike Italy, in the USA, states with regulated online gambling collect an average of 90% of their overall revenue from internet-based channels.
Flutter Continues to Make Heavyweight Moves in the Global Gaming Sector
The Sisal Group acquisition is the latest in a series of blockbuster deals that Flutter has accomplished to expand its gambling footprint across different global markets over the last couple of years. Some of the most notable tie-ups executed by the company in the recent past include:
- October 2019: A $13 billion merger with Toronto-based Stars Group to make it one of the largest gambling companies in the world.
- December 2020: Acquired $4.2 billion worth of Fastball Holding stake in FanDuel to up its ownership of the company from 58% to 95%, placing its total estimated value in FanDuel at $11.2 billion.
- March 2021: Bought the majority 50.1% stake worth $66.2 million in Junglee Games, an Indian gaming start-up.
- July 2021: Agreed to sell Oddschecker, its sports betting affiliate brand, to Bruin Capital for $215 million.
- November 2021: Flutter bought Sunderland-based online bingo brand, Tombola for over half a billion dollars (~$542 million).
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