Flutter Entertainment Acquires Controlling Stake in Snaitech for $2.55 billion

Flutter Entertainment has announced its acquisition of Snaitech, an Italy-focused omnichannel operator, from Playtech for a total enterprise value of €2.30 billion. The deal, set to complete by Q2 of next year, will give Flutter 100% ownership of Snaitech, enhancing its presence in the Italian market. The acquisition aligns with Flutter’s strategy to invest in leading positions within international markets and further consolidates its portfolio of local hero brands. Snaitech’s strong online and retail presence, combined with Flutter’s scale and expertise, is expected to generate significant cost synergies and accelerate growth in Italy’s competitive gambling landscape.

Flutter’s Strategic Acquisition of Snaitech

Expansion into the Italian Market
Flutter Entertainment’s acquisition of Snaitech underscores its strategy to bolster its position in key international markets. Snaitech, Italy’s third-largest online gambling operator with a 9.9% market share and 291,000 average monthly players in 2023, adds significant value to Flutter’s existing Italian portfolio, which includes brands like PokerStars, Betfair, and Tombola. The acquisition further strengthens Flutter’s footprint in Italy’s fast-growing gaming sector, enhancing its local market leadership.

Complementing Flutter’s Local Hero Brand Strategy
Snaitech adds to Flutter’s portfolio of ‘local hero’ brands, which include market leaders with strong local presence, such as Brazil’s Betnacional, acquired through a 56% stake in parent company NSX Group. Snaitech’s established brand, particularly its robust retail network of 2,000 points of sale, aligns well with Flutter’s approach of leveraging local expertise and market knowledge to drive growth.

Financial Impact and Synergies

Significant Revenue and Retail Footprint
Snaitech generated €947 million in regulated revenue and €256 million in adjusted EBITDA in Playtech’s 2023 fiscal year, with half of its earnings derived from online operations. The company’s expansive retail presence, accounting for 19% of the retail betting market and 14% of the retail gaming market in Italy, complements its online business and positions Flutter as a formidable player in both channels.

Cost Synergies of €70 Million Expected
Flutter anticipates €70 million in cost synergies within three years of completing the acquisition, driven by its Flutter Edge approach. This strategy leverages Flutter’s global scale, technology, and talent, providing Snaitech with advanced pricing, risk management, and in-house casino content capabilities. These synergies are expected to enhance Snaitech’s operational efficiency and improve the overall customer experience, solidifying its market position.

Regulatory and Strategic Outlook

Pending Regulatory Approvals
The acquisition remains subject to merger control and other customary regulatory clearances. Flutter will provide additional details during its upcoming investor day on September 25. The company’s commitment to maintaining regulatory compliance underscores its strategic approach to expanding through acquisitions in tightly regulated markets.

CEO’s Vision for Growth
Flutter CEO Peter Jackson described the acquisition as both strategically and financially compelling, emphasizing that it aligns perfectly with the company’s value-creating M&A strategy. Jackson highlighted the significant opportunity to accelerate Snaitech’s growth by integrating Flutter’s market-leading products and capabilities, not just in Italy, but also leveraging its global expertise.

“I look forward to welcoming the Snai team to the Flutter Group and working with them to maximise the growth opportunity for our combined businesses,” Jackson stated, signaling confidence in the synergies and long-term benefits of the acquisition.

Implications for Playtech’s Strategic Shift

Focus Returns to B2B Operations
For Playtech, the sale of Snaitech represents a threefold return on its initial €846 million investment made in 2018. The company now plans to refocus on its core B2B operations, aiming to enhance its technology offerings, grow its customer base, and expand its market share. This strategic pivot towards a simplified business model allows Playtech to concentrate on its strengths in technology-driven B2B markets.

Value Creation for Shareholders
Playtech views the Snaitech sale as a “large value creation event” for shareholders. The company plans to return between £1.7 billion and £1.8 billion to shareholders through a special dividend, equating to £4.56-£4.83 per share. Playtech CEO Mor Weizer acknowledged Snaitech’s role in the group’s growth but emphasized that the transaction offers a compelling opportunity to maximize shareholder value.

“This transaction represents a compelling opportunity to maximise value for shareholders while allowing us to concentrate on our technology-led B2B strategy,” Weizer noted, framing the divestiture as a strategic realignment that positions Playtech for future success.

Looking Ahead: Growth and Integration

Accelerating Snaitech’s Long-Term Growth
As Flutter integrates Snaitech into its broader operations, the focus will be on leveraging Flutter’s extensive resources to drive growth in Italy’s lucrative market. The combined strengths of both companies are expected to create a dynamic player capable of setting new standards in the Italian gambling industry.

Strategic M&A as a Growth Lever
This acquisition reflects Flutter’s broader strategy of using targeted mergers and acquisitions to solidify its market positions in key regions. By acquiring established brands with strong local recognition, Flutter not only enhances its competitive edge but also positions itself for sustainable growth in an increasingly competitive global market.