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  • Flutter targets 20% market share in Italy with €1.9bn Sisal acquisition
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Flutter Entertainment has acquired Italian gambling giant Sisal from private equity owners CVC Capital Partners for €1.91bn.

The cash purchase is scheduled to complete in Q2 2022 and will help Flutter to secure a market-leading position in Italy, which is Europe’s second largest gambling market behind the UK.

Flutter expects the acquisition to result in an overall online market share of 20% in Italy, when Sisal revenue is combined with the operator’s PokerStars and Betfair brands. Sisal’s current market share stands at around 12%.

Milan-headquartered Sisal is set to generate €248m in EBITDA for the 12 months to December 2021. More than half (58%) comes from online, while the remainder is derived from a combination of retail and lottery operations.

Approximately 90% of Sisal’s 2021 EBITDA is generated in Italy, with the rest coming from regulated lottery operations in Turkey and Morocco. The transaction will see Flutter enter the lottery vertical for the very first time.

Sisal is also in the running for the contract for the next UK National Lottery licence, although it remains to be seen how this deal will affect that bid should the acquisition complete. iGaming NEXT understands the National Lottery licence application played no part in Flutter’s rationale for the deal.

Flutter said Sisal’s omni-channel offering would deliver a competitive advantage to Flutter given Italy’s gambling ad restrictions and the prevalence of cash deposits and withdrawals via retail.

The FTSE 100 operator has identified huge scope for growth in the market with many retail customers yet to migrate online, which Sisal’s omni-channel product can capitalise on.

While just 10% of overall 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, according to Flutter.

Online penetration rates are well below the UK and Australia, where online share of total gambling spend was estimated to be circa 60% and 70% respectively in 2019.

Flutter said the Italian online market is projected to be worth £3.6bn by 2024, equating to forecast five-year compound annual growth of 18%.

Sisal expects to report revenue of €694m for full-year 2021. It will be accretive to Flutter’s adjusted earnings in the first 12 months post-completion.

“We see tangible opportunities to deliver material revenue synergies from the acquisition of Sisal through leveraging Sisal’s retail channel to grow online deposits for existing Flutter brands (PokerStars and Betfair),” said the operator, which expects to cost synergies to be circa £10m as a result of the transaction.

It has also pledged to enhance Sisal’s sports betting offering by utilising Flutter’s pricing and risk capabilities, as well as its casino product via Flutter’s in-house gaming content.

Flutter CEO Peter Jackson said: “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,” he added.

The total consideration for Sisal is €1.91bn (£1.62bn), which is payable in cash in full on completion of the transaction and includes full repayment of all Sisal’s debt.

The transaction will be financed by way of additional Flutter debt facilities, agreed with Barclays Bank. The transaction is conditional on merger control clearance and customary gaming and foreign investment consents.

Sisal CEO Francesco Durante is part of an experienced management team that will continue to lead the business under the Flutter umbrella.

He said: “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,” he added.

Flutter’s share price increased by 3% in early trading on the London Stock Exchange to 11,715p per share.

Regulus Partners analyst Paul Leyland said of the deal: “Flutter is buying a high quality digital business in a market that has gained scale, whatever the immediate future may hold.

“Given Flutter’s failure to meaningfully penetrate the Italian market outside PokerStars (demonstrating the destructive pointlessness of marketing me-too or over-specialised products), this deal further makes sense both in terms of acquiring a vital ‘Local Hero’ for digital betting and casino and critical omnichannel reach.

“Indeed, the combined Italian digital share would put Flutter into an online leadership position, outstripping the combined brands of Lottomatica and Entain,” he added.

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