TIDMFLTR
RNS Number : 5652W
Flutter Entertainment PLC
23 December 2021
23 December 2021
Flutter Entertainment plc
Acquisition of Sisal, Italy's leading online gaming operator
Flutter Entertainment plc ( "Flutter" or the "Group") is pleased
to announce the acquisition of Sisal ("Sisal"), Italy's leading
online gaming operator, from CVC Capital Partners Fund VI for a
consideration of EUR1.913bn/GBP1.62bn. This acquisition fully
aligns with the Group's strategy of investing to build leadership
positions in regulated markets globally. The transaction is likely
to complete during Q2 2022 and is expected to be accretive to
adjusted earnings in the first 12 months post-completion.
Sisal is a leading betting, gaming and lottery operator
headquartered in Milan. In the 12 months to December 2021(1) ,
Sisal expects to generate EBITDA of EUR248m/GBP211m, with 58%
coming from its online offering and the remainder coming from a
combination of retail and lottery operations. Approximately 90% of
Sisal's 2021 EBITDA is generated in Italy with the balance coming
from regulated lottery operations in Turkey and Morocco. The
business employs circa 2,500 people today.
The addition of Sisal to Flutter delivers several key strategic
outcomes:
-- Secures a gold medal position in Italy by bringing the
leading online brand into the Flutter portfolio. The combination of
Sisal with Flutter's existing online Italian presence through
PokerStars and Betfair will result in a combined online share of
20%(2)
-- Increases the Group's exposure to an attractive,
fast-growing, regulated online market: Italy is Europe's 2(nd)
largest regulated gambling market and one that has seen online
penetration grow from 10% in 2019 to approximately 20% today.
Sisal's online revenues have grown by a compound annual rate of 34%
since 2016
-- Sisal's omni-channel offering will deliver a competitive
advantage to Flutter's business, particularly given Italy's
advertising restrictions and the prevalence of cash deposits and
withdrawals through retail
-- Increases Flutter's recreational customer base with the
addition of 300,000(3) highly engaged online average monthly
players and over 9.5m retail customers
-- Further diversifies Flutter's product and geographical
footprint and increases the proportion of Flutter's revenue from
regulated markets which in Q3 2021 was over 91%
-- Bolsters Flutter's existing talent pool by adding a proven
management team that will continue to lead the business and who
have sought to take a leadership position in the promotion of safer
gambling in Italy
Peter Jackson, Flutter Chief Executive, 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. We look forward to welcoming
Francesco and the rest of the Sisal team to Flutter in 2022."
Francesco Durante, Sisal Chief Executive, commented:
"Over the last five years, thanks to CVC's support, we have
successfully transformed Sisal into a leading digital and
international gaming company. Through our commitment to digital
innovation, international expansion and safer gambling, we have
achieved a leadership position in Italy's online gaming market and
developed our global footprint by winning lottery tenders in
Morocco and Turkey. 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."
Giampiero Mazza, Managing Partner at CVC Italy commented:
"We are very proud of the success achieved by Sisal and its
transformation since our acquisition in 2016. Through heavy
investment in its digital competencies, Sisal has become Italy's
leader in online gaming while also growing its international
operations. Furthermore, the Company is leading the Italian
industry in ensuring responsible and safe gaming. We want to thank
Francesco and the whole management team for their incredible
dedication, focus and ambition, and for leading this successful
journey in spite of regulatory challenges and the pandemic. Flutter
is a fantastic new partner for Sisal and we wish them the very
best."
1. Attractiveness of the Italian market to Flutter
The Italian market offers the following attractive
characteristics:
-- Size: Italy is the second largest regulated gambling market
in Europe after the UK, with total estimated gross gaming revenue
(GGR) in 2019 of EUR19bn/GBP16bn(4)
-- Potential for online growth due to ongoing migration from retail:
o Whilst just 10% of total Italian GGR was generated online in
2019, the Covid-19 pandemic has led to a material increase to
around 20% over the last two years. We expect that a sizable
proportion of migrated customers are likely to remain online as
trading conditions normalise
o Online penetration rates remain well below the UK and
Australia where online share of total gambling spend was estimated
to be circa 60% and 70% respectively in 2019
o With good ongoing structural momentum, the Italian online
market is projected to be worth GBP3.6bn by 2024, equating to
forecast 5-year compound annual growth of 18%(5)
-- Strategic advantages of retail network access:
o Omni-channel operators, such as Sisal, are capable of
maximising growth due to their retail presence and ability to
engage with customers across both channels
o Advertising restrictions in particular have emphasised the
opportunity for omni-channel operators to acquire online customers,
allowing them to leverage their high brand awareness through having
a retail presence. Since these restrictions were introduced, large
omni-channel operators have gained market share at the expense of
online-only operators
o In addition, a significant proportion of online
deposits/withdrawals are done via the retail network, with retail
staff acting as brand advocates, providing multi-channel operators
with a competitive moat around their businesses
-- Diversified product demand:
o In 2022(5) an estimated 95% of online revenue is expected to
come from gaming (59%) and sports betting (36%) combined, a mix
that overlaps well with Flutter's core areas of expertise
o The majority of retail revenue is expected to be derived from
gaming machines (57%) and lottery (37%), with just 6% coming from
sports betting
2. Sisal - Italian market leader and key online asset
We believe that Sisal is very well-positioned to benefit from
the structural growth drivers highlighted above. Key features of
the business include:
-- A leadership position today: Sisal's online market share is
currently 11.9%(2) . Combined with Flutter's existing assets we
will reach circa 20% share(2)
-- A market leading brand: Clear #1 brand for 'top of mind'
awareness in the Italian market, aided by a retail footprint of
circa 1,700 Sisal outlets and a further 40,000 concession
points/points of sale
-- A diverse product offering: Across gaming, sports and lottery
-- Highly engaged player base: Over 300,000(3) online average
monthly players in Italy and a retail base of 9.5m customers to
migrate online
-- Proprietary technology: The business operates on a fully
proprietary technology stack with a strong focus and track record
in delivering product innovation, powered by over 1,000 employees
dedicated to online product development
-- Experienced management team that will continue to lead the business
-- Scope to grow in other markets/product verticals: Lotteries
have enabled Sisal to successfully grow outside of Italy. In
Turkey, its lottery operation is projected to generate GBP22m
EBITDA in 2021 despite only launching in 2020. This acquisition
provides Flutter with lottery capabilities for the first time
-- Focus on sustainability: Market leading focus on ESG and
safer gambling underpinned by AI and the highest standards of
industry certification
3. Financials and consideration(1)
Sisal expects to report revenue (after deduction of gaming
duties) in 2021 of GBP590m (EUR694m)(6) . It expects to report
consolidated EBITDA(7) of GBP211m (EUR248m), 90% of which will come
from its Italian operations (online 59%, retail 31%).
We see tangible opportunities to deliver material revenue
synergies from the acquisition of Sisal through (i) leveraging
Sisal's retail channel to grow online deposits for existing Flutter
brands (PokerStars and Betfair), (ii) enhancing Sisal's sports
betting offering by utilising Flutter's pricing and risk management
capabilities and (iii) enhancing Sisal's casino product by
providing it with access to Flutter's in-house gaming content. Cost
synergies from the transaction are expected to be circa GBP10m,
principally due to potential procurement savings. We anticipate
that revenue synergies will exceed cost synergies over time.
The total consideration for Sisal is EUR1.913bn/GBP1.62bn, which
is payable in cash and in full on completion of the transaction.
This amount includes full repayment of all Sisal's debt upon
completion. The transaction will be financed by way of additional
Flutter debt facilities, agreed with Barclays Bank PLC. The
transaction is conditional on merger control clearance and
customary gaming and foreign investment consents. Subject to these
approvals, it is expected that the transaction will complete in Q2
2022.
Ends.
The person responsible for arranging release of this
Announcement on behalf of Flutter is Edward Traynor, Company
Secretary of Flutter.
Contacts:
Investor Relations:
David Jennings, Group Director of Investor
Relations & FP&A + 353 87 951 3560
Ciara O'Mullane, Investor Relations + 353 87 947 7862
Liam Kealy, Investor Relations + 353 87 665 2014
Press:
Lindsay Dunford, Corporate Communications + 44 79 3197 2959
Robert Allen, Corporate Communications + 44 75 5444 1363
Billy Murphy, Drury Communications + 353 1 260 5000
James Murgatroyd, Finsbury + 44 20 7251 3801
(1) Financial projections for FY 2021 have been provided by
Sisal management and are consistent with 10 months of actual EBITDA
performance (GBP163m) and 2 months of projected performance
(GBP48m). FY 2021 has been used in this release as we believe it is
a better reflection of the ongoing earnings power of the business;
2020 performance was materially impacted by Covid-19 related retail
restrictions
(2) Online market share of gross gaming revenue in October
2021
(3) Average number of players in the 12 months to 30 June
2021
(4) Source: ADM (Agenzia delle Dogane e dei Monopoli - Italian
gaming regulator), MDF Partners. Includes lotteries of GBP5bn
(5) Source: MDF Partners
(6) We will align Sisal's revenue definition with Flutter's
(which is reported before deduction of gaming duties) post
completion and report consistent revenue numbers accordingly.
(7) The consolidated EBITDA figure of EUR248m for 2021 includes
EUR13m accruing to minority shareholders
(8) Gross asset value of Sisal was EUR1,658m as at 30 September
2021
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
ACQTTBJTMTJTTFB
(END) Dow Jones Newswires
December 23, 2021 02:00 ET (07:00 GMT)
Grafico Azioni Flutter Entertainment (LSE:FLTR)
Storico
Da Mar 2024 a Apr 2024
Grafico Azioni Flutter Entertainment (LSE:FLTR)
Storico
Da Apr 2023 a Apr 2024
