Flutter pushes Balkans expansion plans forward with €141m deal for MaxBet stake

Flutter Entertainment has agreed a €141m (£123m) deal to acquire a 51% stake in Serbian omnichannel sports betting and gaming operator MaxBet.

The London-listed operator has revealed financing for the multi-million-pound transaction is on a debt and cash-free basis, with an agreement to make a further undisclosed payment if MaxBet exceeds its expected financial performance in 2023.

Flutter has also confirmed an option to acquire the remaining 49% stake in 2029 based on “similar terms” to the current acquisition agreement.

MaxBet has grown online by 25% on a compound annual basis over the last five years and, according to market size, online penetration, net gaming revenue and internal estimates, operates a 20% estimated market share.

With 95,000 online average monthly players, MaxBet operates omnichannel operations in Serbia, Bosnia and Montenegro as well as a retail-only footprint in North Macedonia with 400 outlets. It has 2,400 employees.

In the first half of 2023, the Serbian business generated proforma revenue of €145m, with 44% of that coming from online operations. The company has an adjusted EBITDA of €32m.

Addressing its rationale behind the acquisition, Flutter suggested it fully aligned with its key strategic criteria in three distinct areas.

Firstly, MaxBet provides what Flutter called an “enhanced competitive position” in a fast-growing regulated market in Serbia, with the market worth an estimated €700m.

The Serbian market operates with a relatively low online penetration of 35% and an expected online compound annual growth rate to 2025 of approximately 15%, based on internal estimates.

“Market dynamics within the Balkans region typically create competitive moats for omnichannel operators due to cash-led economies as well as the importance of retail footprints,” the operator confirmed.

The second factor behind the acquisition is the ability to add a “local hero” to the Flutter portfolio, as the operator has done with previous acquisitions including Sisal and Indian operator Junglee.

Flutter has also cited MaxBet’s strong management team and local market expertise, as well as good cross-sell between retail and online, coming despite a low-level marketing spend as important criteria.

Finally, Flutter has said the acquisition “presents a clear opportunity” to deliver growth through the deployment of the Flutter Edge strategy in a number of areas including adding Flutter’s digital marketing expertise, risk pricing, content and technology to develop the business and increase its scale.

The transaction is subject to customary regulatory clearances and is expected to close in Q1 2024.

In a statement confirming the deal, Flutter Entertainment CEO Peter Jackson expressed his excitement about the potential impact on the firm’s international division.

“This acquisition continues our progress against the strategic priorities we have set for our International division; to buy and build podium positions in regulated markets,” Jackson explained.

“We believe MaxBet is an excellent opportunity to replicate the success we have achieved in markets like Georgia, India and Italy by acquiring a strong brand in a podium position, where we see a compelling opportunity to combine that extensive local expertise with the power of the Flutter Edge to accelerate and transform growth,” he added.

Flutter’s share price rose by just over 1% in early trading on the London Stock Exchange, with shares trading at 13,805p (27 September).