Playtech Sells Snaitech to Flutter Entertainment in a €2.3bn Deal

4 weeks ago 0 76

In a major development within the global gaming industry, Playtech has agreed to sell its Italian sports betting and gaming company, Snaitech, to Flutter Entertainment for a total enterprise value of €2.3bn ($2.56bn). The sale represents a significant financial victory for Playtech, having acquired Snaitech in 2018 for €846m ($941.45m). This nearly threefold return on Playtech’s initial investment solidifies the deal as a major triumph for the company, positioning both parties for future success in the highly competitive European gaming market.

Playtech’s Acquisition and Growth of Snaitech: A Strategic Masterpiece

Playtech’s purchase of Snaitech in 2018 was a key step in its strategy to enhance its footprint within Italy’s booming gambling market, one of Europe’s largest. Since the acquisition, Playtech has methodically developed Snaitech’s operations, growing its adjusted EBITDA from €136m in 2017 to €256m in 2023. This impressive growth is a testament to Playtech’s effective management and strategic vision for Snaitech, positioning it as a dominant player in both the online and retail sectors.

Snaitech benefited significantly from Playtech’s expertise in digital transformation, strengthening its online presence and securing a leading market share in the Italian gaming industry. At the same time, the company continued to flourish in the retail sector, with Playtech leveraging its advanced technology solutions to optimize and expand Snaitech’s traditional retail offerings.

With the culmination of this rapid growth, Playtech has decided to capitalize on its investment by selling Snaitech at a valuation of €2.3bn, a remarkable 9x EBITDA multiple for 2023. The sale further underscores Playtech’s strong strategic acumen and ability to unlock value from its acquisitions.

Playtech’s Focus on B2B Growth Post-Sale

The sale of Snaitech is part of Playtech’s broader plan to shift its focus back to its core B2B business, particularly in growing markets across the Americas and Europe. This shift comes as the company aims to capitalize on the rapidly expanding iGaming markets in these regions. Playtech’s B2B segment has been pivotal to its success, providing technology solutions and platforms for many of the world’s largest gaming operators.

Following the Snaitech sale, Playtech is expected to return between £1.7bn and £1.8bn to its shareholders through a special dividend, which could range from £4.56 to £4.83 per share. This sizable return to shareholders exceeds Playtech’s share price at the start of 2024, highlighting the significant value the company has unlocked through the Snaitech deal.

By divesting from Snaitech, Playtech frees up capital and management bandwidth to concentrate on further expanding its B2B services in key markets, where it has already established a solid presence and continues to see growing demand for its innovative gaming technology.

Flutter Entertainment Strengthens its Position with Snaitech Acquisition

For Flutter Entertainment, acquiring Snaitech is a strategic win that solidifies its presence in the Italian gaming market, while further expanding its global footprint. Flutter has made significant inroads in the Italian market through its ownership of Sisal, a leading Italian lottery and gaming operator, and the acquisition of Snaitech further strengthens its position in the region.

Italy represents a key growth market for Flutter, as it is one of the largest and most mature regulated gambling markets in Europe. Snaitech’s robust retail operations and growing online market share will complement Flutter’s existing operations in Italy, enabling Flutter to offer an even broader range of services and products to Italian consumers.

Moreover, this deal comes shortly after Flutter’s acquisition of NSX Group in Brazil, further emphasizing the company’s commitment to expanding its global presence in regulated gaming markets. By adding Snaitech to its portfolio, Flutter has taken another significant step toward consolidating its position as one of the world’s leading gaming and entertainment companies.

The Financial Impact: Share Price and Market Response

The deal, valued at £6.27 ($8.28) per share, represents a 16.5% premium over Playtech’s previous share price of £5.38 ($7.11). This premium reflects the market’s confidence in the strategic value of Snaitech and its strong growth potential under Flutter’s ownership. The sale price highlights the financial strength of both companies, signaling that investors anticipate continued growth and profitability for both Flutter and Playtech following the transaction.

Although the share prices of both companies remained steady immediately after the announcement, market analysts predict potential upward movement as investors digest the full implications of the deal. The high premium and the strategic fit of Snaitech within Flutter’s portfolio are expected to contribute positively to Flutter’s overall market performance.

What the Future Holds for Playtech and Flutter

The sale of Snaitech marks a pivotal moment for both Playtech and Flutter Entertainment. For Playtech, it represents a successful exit from the Italian gaming market, allowing the company to return substantial value to its shareholders and refocus its efforts on expanding its B2B operations in the Americas and Europe. Playtech’s strategic decision to divest from Snaitech ensures that it remains agile and financially robust as it seeks to capitalize on new opportunities in growing markets.

For Flutter, the acquisition of Snaitech provides an enhanced foothold in one of Europe’s largest and most established gambling markets. Flutter’s proven ability to integrate and grow its acquisitions ensures that Snaitech will continue to thrive under its ownership, bolstering Flutter’s position as a leading player in both the Italian and global gaming industries.

As the gaming industry continues to evolve, both Playtech and Flutter Entertainment are well-positioned to navigate the changing landscape and deliver long-term value to their shareholders. The deal between these two giants underscores the growing consolidation in the gaming sector, as companies seek to leverage synergies and expand their footprints in regulated markets around the world.

FAQs About Playtech’s Sale of Snaitech to Flutter Entertainment

1. What is the value of Playtech’s sale of Snaitech to Flutter Entertainment?

Playtech has agreed to sell Snaitech to Flutter Entertainment for a total enterprise value of €2.3bn ($2.56bn).

2. How much did Playtech originally acquire Snaitech for?

Playtech acquired Snaitech in 2018 for €846m ($941.45m).

3. What is the premium on the sale price of Snaitech?

The sale price of £6.27 ($8.28) per share represents a 16.5% premium over Playtech’s previous share price of £5.38 ($7.11).

4. How much has Snaitech’s adjusted EBITDA grown under Playtech’s ownership?

Snaitech’s adjusted EBITDA grew from €136m in 2017 to €256m in 2023 under Playtech’s ownership.

5. What will Playtech do with the proceeds from the sale of Snaitech?

Playtech plans to return between £1.7bn and £1.8bn to shareholders through a special dividend, potentially ranging from £4.56 to £4.83 per share.

6. Why is Playtech selling Snaitech?

Playtech is selling Snaitech to focus on its core B2B business in growing markets in the Americas and Europe, where it sees significant potential for future growth.

7. What is the significance of this deal for Flutter Entertainment?

For Flutter Entertainment, the acquisition of Snaitech strengthens its presence in the Italian gaming market, complementing its ownership of Sisal, and further expands its global footprint.

8. How is the market reacting to the Playtech-Snaitech deal?

Following the announcement, share prices for both Playtech and Flutter have remained steady, but analysts expect a positive impact as investors fully evaluate the strategic benefits of the deal.

9. What does this sale mean for Snaitech’s future?

Under Flutter’s ownership, Snaitech is expected to continue thriving as part of a broader strategy to grow Flutter’s operations in regulated European markets, particularly in Italy.