01—Abstract
Summary
Summary of the 8-K filed September 13, 2024. Cited figures are marked; the original filing is the authoritative source.
Flutter Entertainment plc reported under Item 7.01 (Regulation FD) that it has agreed to acquire an initial 56% stake in NSX Group, a leading Brazilian operator of the Betnacional brand, for cash consideration of approximately $350am.
Under the transaction agreement, Flutter will pay that cash and contribute its existing Betfair Brazil business in exchange for a 56%b stake in the newly combined Flutter Brazil business. Reciprocal put/call arrangements in year five and year ten after completion would allow Flutter to increase its shareholding, with future transactions at fair market value. The company describes NSX as the number 4 operator in Brazil, with 12% of the sports betting market and a 9% share of the total online market.
NSX is expected to generate revenue of approximately $256cm and Adjusted EBITDA of approximately $34m in 2024 on a standalone basis, while Betfair Brazil is forecast to generate revenue of approximately $70m in 2024. Flutter expects Flutter Brazil to post an Adjusted EBITDA loss of approximately $90-100m in 2025 as it invests in customer growth ahead of full market regulation in early 2025.
Flutter reiterated its medium-term leverage ratio target of 2.0-2.5xd and said completion, subject to customary regulatory clearances, is expected by Q2 2025. The company plans to provide a further update at its Investor Day on September 25.
02—Key points
Key Highlights
- Flutter agreed to acquire an initial 56% stake in NSX Group, operator of the Betnacional brand, for cash consideration of approximately $350m, subject to completion accounts adjustments.
- On completion, Flutter contributes its existing Betfair Brazil business and receives a 56% stake in the combined Flutter Brazil business.
- NSX is the number 4 operator in Brazil, with 12% of the sports betting market and 9% of the total online market (2023).
- NSX standalone 2024 estimates: revenue of approximately $256m and Adjusted EBITDA of approximately $34m, based on NSX internal reporting.
- Flutter expects a Flutter Brazil Adjusted EBITDA loss of approximately $90-100m in 2025; PokerStars casino and sportsbook products in Brazil are expected to be switched off from 1 January 2025, costing about $10m in Adjusted EBITDA.
- Reciprocal put/call arrangements in year five and year ten after completion allow Flutter to increase its shareholding, at fair market value.
- Flutter reiterated its medium-term leverage ratio target of 2.0-2.5x; completion is expected by Q2 2025 and an Investor Day update is scheduled for September 25.
03—Questions
Frequently Asked Questions
How much is Flutter paying for the NSX stake?
Flutter will pay cash consideration of approximately $350m (R$1,981m at USD:BRL 5.66), subject to completion accounts adjustments, and will also contribute its existing Betfair Brazil business.
What ownership does Flutter receive in the combined Brazil business?
Flutter receives a 56% stake in the newly combined Flutter Brazil business, with reciprocal put/call arrangements in year five and year ten that could allow it to increase its shareholding.
What is NSX's financial profile?
On a standalone basis, NSX is expected to generate revenue of approximately $256m and Adjusted EBITDA of approximately $34m in 2024, based on NSX internal reporting that may not fully align with Flutter's US GAAP policies.
When is the transaction expected to close and what are the conditions?
Completion is subject to customary regulatory clearances and is expected to close by Q2 2025.
What losses does Flutter expect from Brazil in 2025?
Flutter expects a Flutter Brazil Adjusted EBITDA loss of approximately $90-100m in 2025 as it drives market share growth and invests in customers in the newly regulated market.
04—Continue