Flutter snaps up Snaitech for €2.3bn from Playtech

Flutter Entertainment has acquired Snaitech from Playtech for €2.3bn as the New York-listed operator’s M&A spree continues.

The transaction values Snaitech and several of its subsidiaries at a full-year adjusted EBITDA multiple of 9x.

The deal also represents a multiple of 5.6x on Playtech’s adjusted EBITDA in 2023, or £6.27 per Playtech share, a premium of 16.5% of the FTSE 250 firm’s stock on 13 August.

Playtech said that once the transaction completes, which is expected to be in Q2 2025, it intends to return between €1.7bn and €1.8bn to shareholders by way of a special dividend.

Playtech also shared that the proceeds would be used to repay amounts outstanding on existing bonds due March 2026, which currently sit at around €350m.

The London-listed company has confirmed 34.4% of its shareholders, representing some of its largest individual shareholders, have expressed support for the deal and an implementation of a revitalised incentive scheme.

As such, Playtech’s senior team could receive up to €100m in bonus awards while the Snai team will be handed an aggregate cash bonus pool of €34m.

Under the remit of the transaction, Playtech Services (Cyprus), a subsidiary of Playtech, will sell Snaitech’s holding company, Pluto, to Flutter.

In acquiring the Pluto holding company, Flutter will take ownership of the Snai B2C brand.

However, HAPPYBET, another B2C brand in the Pluto portfolio, will be excluded from the deal.

Talks between the two parties had been confirmed by Playtech last month following media reports.

What does it mean for Flutter?

Flutter said the transaction would give the Paddy Power parent company a combined approximate market share of 30% in Italy.

Snai is the third largest operator in the Italian market with a 9.9% share in 2023 and around 291,000 average monthly players.

The brand is also the second largest player in the retail sector in Italy, with more than 2,000 shops driving market share of 19% in betting and 14% in gaming.

Last year, Snaitech reported revenue of €947m and adjusted EBITDA of €256m, of which 50% came from online operations.

Flutter is already live in Italy with its PokerStars, tombola and Betfair brands, while it added lottery giant Sisal to its portfolio in 2022 for €1.91bn.

Explaining the rationale behind the deal, Flutter pointed to the size of the Italian market, with GGR of €21bn last year, and the relatively small online penetration of just 21%.

Additionally, the operator cited Snai’s strong brand awareness and omnichannel players who are “more loyal, more active and generate more revenue per player than online-only players”.

Flutter confirmed operating cost synergies of at least €70m via the integration of technology, content and third-party procurements.

Those synergies are expected to be achieved in the three years following the deal’s conclusion, with 10% in year one and 50% in year two. The cost to achieve the synergies has been pegged at 1.25x.

The business said: “Flutter has consistently delivered material revenue synergies to acquired businesses as demonstrated by the compound revenue growth rates of 17% and 19% for Sisal and Tombola respectively between Q2 2022 and Q2 2024.”

Flutter also championed the improvements to come to Snai due to the Flutter Edge, whereby the best products, pricing and tech from its global reach can be imbued onto other brands.

Flutter said: “Revenue synergies will be achieved by providing Snai with access to Flutter Edge capabilities across pricing and risk management, in-house casino content and leveraging Flutter technology platforms, materially enhancing the customer experience for Snai customers.”

The operator added that Snaitech is expected to be “immediately accretive to earnings per share”.

The move for Snaitech comes just days after Flutter announced it was taking a 56% stake in NSX Group, the parent company behind Brazilian operator Betnacional.

Playtech’s next steps

Snai and its related assets accounted for 55.4% of Playtech’s total group revenue last year, and with the brand and its associated 1,030 employees set to depart, its focus will shift to mainly B2B operations.

Playtech said: “Playtech management are focused on maintaining a strong cash flow profile and are exploring a number of strategies to optimise the cash flows for the continuing group.”

B2B revenue last year landed at €684.1m, with Playtech claiming that once the transaction closes, the new “simplified business model and focused B2B strategy” will allow it to push ahead.

Playtech will be able to “improve its market-leading technology, positioning it to further grow its customer base and expand its share of wallet with existing customers,” bosses said.

Playtech acquired Snaitech in 2018 for €846m.

The bosses talk

Peter Jackson, Flutter CEO, said: “I am delighted to announce the acquisition of Snai, one of the leading players in Italy, Europe’s largest regulated market.

“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.

“I look forward to welcoming the Snai team to the Flutter Group and working with them to maximise the growth opportunity for our combined businesses.”

Mor Weizer, Playtech CEO, added: “While Snaitech has been an important part of Playtech’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.

“The combination of Playtech’s leading technology with its exposure to attractive markets, including in the Americas and Europe, provides a strong platform for growth in the medium-term. We are excited about what the future holds and the many opportunities ahead of us.

“In Flutter, Snaitech will have a new owner with an existing presence in Italy and all of the opportunities that brings. I’m confident that Snaitech will continue to excel under their ownership.”