Flutter Entertainment has made moves to strengthen its European position by acquiring Playtech subsidiary Snaitech in a £2 billion acquisition.
Flutter, whose firms include Paddy Power, Betfair and Tombola, has struck an agreement with Playtech over their consumer-facing operator that will see Snaitech added to their already-sturdy interests in the sector.
It will give Flutter added strength in Europe, with Snaitech currently regarded as one of the largest gambling firms in Italy with a market share of just shy of 10%. Flutter will also inherit a customer base thought to be in the region of 291,000 active monthly players.
Perhaps the conglomerate is looking to create a monopoly in the country, having already acquired Italian lottery and gambling outfit Sisal for £1.6 billion back in 2022.
Rolling the Dice
To offer some context as to how badly Flutter wanted Snaitech, the £2 billion bid that they lodged is the equivalent of the entire market value of Playtech.
In a year in which British betting brands have struggled amidst sluggish market conditions and a changing regulatory landscape, Snaitech – operating under its snappier Snai branding – has enjoyed a solid time of things, posting a 5% growth in revenue over the past financial year.
The acquisition will strengthen Flutter’s position in the online casino space in particular, while Playtech will now focus on the B2B sector with their range of software platforms and games.
Perhaps more importantly, as far as Flutter is concerned, the move will increase their market share in Europe to around 30% – a hugely significant milestone, with the possibility of nearly £1 billion extra in revenue per year thanks to Snaitech alone.
It will particularly bolster their efforts in the Italian market, which faces strict regulation and tight rules on advertising and promotions. That makes securing new customers difficult, which is reflected in Flutter’s mission to ‘buy in’ to the existing player base in the country – Sisal and Snai are the first and third largest gambling firms respectively in Italy.
The Italian gambling market has showcased considerable growth in recent years, particularly in online channels, and is thought to be worth around £17.5 billion. At the time of writing, market penetration in the country is around 20% – a clear opportunity for further growth, when compared to the 60% penetration of long-standing markets like the UK.
Peter Jackson, who has overseen a number of acquisitions in recent years in his role as Flutter CEO – including a recent move into the Brazilian market – commented:
“This transaction is compelling strategically and financially.
“It fits perfectly within our strategy for value creating M&A and creates a significant opportunity to accelerate Snai’s growth by providing them with access to Flutter’s market leading products and capabilities both in the US and globally.”
However, it’s thought that the deal won’t be formally concluded until the second quarter of 2025.
In the Crosshairs
Meanwhile, forecasters are predicting that Flutter could yet make a formal takeover bid for Playtech, having somewhat weakened their position with the Snaitech acquisition.
Playtech is considered to be something of a jewel in the gambling space, delivering attractive financial results despite not really having a consumer-facing business model. It’s their intellectual property, which includes innovative software and ever-popular casino games, that drives such attraction from investors.
They have also been savvy on the acquisitions front themselves: they paid £710 million for Snaitech in 2017, so this subsequent sale to Flutter represents an excellent ROI. On their watch, revenues at Snai have almost doubled in less than a decade – from £117 million a year at the time of their takeover to £215 million as of the 2023/24 financial year.
Their chief executive, Mor Weizer, said:
“While Snaitech has been an important part of the Playtech Group’s growth in recent years, the board agreed that this transaction represents a compelling opportunity to maximise value for our shareholders, while also allowing them to share in further upside from continued ownership of a leading B2B business.”
Unsurprisingly, this wouldn’t be the first time that the sharks have circled Playtech. In 2022, they were the subject of intense takeover speculation, with an Asian consortium known as TTB Partners thought to be interested. They ultimately decided not to make an offer.
Later that same year, a formal bid in the region of £2 billion from Australian outfit Aristocrat was rejected by shareholders – despite them being encouraged to take the deal.
The shoe was on the other foot in 2023, however, when Playtech made their own move to expand into the business-to-consumer space. Their £700 million bid to land 888 Holdings was rejected in the July of that year.