01—Abstract
Summary
Summary of the 8-K filed September 17, 2024. Cited figures are marked; the original filing is the authoritative source.
Flutter Entertainment plc announced on September 17, 2024 that it has agreed to acquire Snaitech S.p.A.
(Snai) from a subsidiary of Playtech plc for cash consideration based on an enterprise value of €2.3b, on a cash-free and debt-free basis. Snai is described as one of Italy's leading omni-channel operators, ranked the number three online operator in Italy with a 9.9%a share in 2023 and 291,000 average monthly players. Snai generated regulated revenue of €947m and Adjusted EBITDA of €256m in financial year 2023.
Flutter expects the transaction to close by Q2 2025 and to be immediately accretive to earnings per share, subject to merger control and other customary regulatory clearances. Flutter expects operating cost synergies of at least €70m, achieved over three years after completion (10%b in year one and 50% in year two), at a cost to achieve of 1.25x, along with capital expenditure synergies of €10m and incremental revenue synergies. Management states that on completion Flutter would hold a gold medal position in Italy with a combined online share of ~30% alongside its existing Sisal business.
The company said leverage would rise following completion before reducing rapidly. At June 30, 2024, its leverage ratio was 2.6x with $5.5bnc of net debt, and it remains committed to a medium-term leverage ratio of 2.0-2.5x. Flutter will provide a further update at its Investor Day on September 25.
02—Key points
Key Highlights
- Agreed to acquire Snaitech S.p.A. (Snai) from a subsidiary of Playtech plc for cash, at an enterprise value of €2.3b on a cash-free and debt-free basis
- Snai is the number three online operator in Italy with a 9.9% share in 2023, 291,000 average monthly players, and a number two retail share position in betting of 19% and gaming of 14%
- Snai's FY2023 regulated revenue was €947m and Adjusted EBITDA was €256m, with 50% of Adjusted EBITDA generated online
- Expected operating cost synergies of at least €70m over three years post-completion, plus €10m of capital expenditure synergies, based on management assumptions
- On completion, Flutter expects a gold medal position in Italy with a ~30% combined online share alongside Sisal
- Leverage ratio was 2.6x at June 30, 2024 with $5.5bn of net debt; medium-term target remains 2.0-2.5x
- Transaction expected to close by Q2 2025 and be immediately accretive to earnings per share; Investor Day scheduled for September 25
03—Questions
Frequently Asked Questions
How much is Flutter paying for Snai?
The filing states cash consideration based on an enterprise value of €2.3b, on a cash-free and debt-free basis.
What financial performance does Snai report?
For financial year 2023, Snai generated 100% regulated revenue of €947m (after gaming duties) and Adjusted EBITDA of €256m, of which 50% was generated online. The filing notes these figures are based on Playtech's IFRS reporting and may not fully align with Flutter's US GAAP policies after completion.
What synergies does Flutter expect?
Flutter expects operating cost synergies of at least €70m through technology, content and third-party procurement, achieved 10% in year one and 50% in year two, at a cost to achieve of 1.25x. It also expects €10m of capital expenditure synergies and revenue synergies from access to Flutter Edge capabilities.
How will the acquisition affect Flutter's leverage?
Flutter reported a leverage ratio of 2.6x and $5.5bn of net debt at June 30, 2024. It expects leverage to increase following completion by Q2 2025 but then reduce rapidly, and it remains committed to a medium-term leverage ratio of 2.0-2.5x.
When is the deal expected to close and what are the conditions?
Flutter expects the transaction to close by Q2 2025. It is subject to merger control clearance and other customary regulatory clearances.
04—Continue