Flutter Entertainment PLC (LSE:FLTR) said it bought Sisal, Italy's leading online gaming operator, for €1.913bn (£1.62bn), boosting its position in Europe’s second-largest regulated gambling market.
The acquisition, from CVC Capital Partners Fund VI, is set to complete in the second quarter of 2022. It is expected to be earnings accretive in the first 12 months following completion, Flutter said in a statement.,
Milan-based Sisal is a leading betting, gaming and lottery operator with around 2,500 employees. It expects to generate EBITDA of €248mln in 2021, with 58% coming from its online offering and the remainder from retail and lottery operations.
Around 90% of the company’s 2021 EBITDA is generated in Italy with the rest coming from regulated lottery operations in Turkey and Morocco.
Sisal is also competing in the tender to run the UK National Lottery.
The deal diversifies Flutter's product and geographical footprint and increases the proportion of its revenue from regulated markets, which was over 91% in the third quarter of 2021.
The combination of Sisal and Flutter's existing online Italian presence through PokerStars and Betfair will give the group an online market share of 20% in Italy.
Italy is Europe’s second-largest regulated gambling market after the UK, with total estimated gross gaming revenues in 2019 of €19bn.
Online penetration has grown from 10% in 2019 to around 20% at present, but remains well below the UK and Australia where the online share of total gambling spend was estimated to be 60% and 70% respectively in 2019.
Flutter said the Italian online market is projected to be worth £3.6bn by 2024, equating to five-year compound annual growth of 18%.
Sisal's online revenues have grown by a compound annual rate of 34% since 2016, Flutter said.
The acquisition will add 300,000 online average monthly players and over 9.5 million retail customers to Flutter’s recreational customer base.
"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,” commented Flutter chief executive Peter Jackson.
“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.”
Francesco Durante, Sisal’s chief executive, added: “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."
Giampiero Mazza, managing partner at CVC Italy, said: "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.”