Flutter Mulls Acquisition of Playtech’s Snaitech Unit
According to reports, Flutter Entertainment (NYSE: FLUT) is in talks to buy Playtech's (LSE: PTEC) Snaitech division. This revelation caused shares of the target's parent company to surge in London trading.
According to media reports, FanDuel is willing to pay up to $2.56 billion for Snaitech, which is a significant premium over Playtech's estimated $2.12 billion market valuation. Established in 1990 and operating under the Snai brand, Snaitech provides sports and horse betting services as well as managing over 49,000 gaming and lottery machines in Italy.
"The website, snai.it, offers a vast range of gaming and entertaining services including all online products: sport and horse racing betting, poker cash and poker tournament, skill games, casino and cash games, betting on virtual events, forecasts, bingo, lotteries and number games, virtual sports. Betting and casino apps are available also from website using a technology that adapts to all devices,” according to the company.
Moreover, Snaitech has some exposure to Germany and Austria via to its acquisition of Happybet in 2022. Playtech's stock saw its largest intraday surge in over three years today when it was up 22% due to the announcement.
Potential Playtech Deal Could Finally Happen
The level of discussion between Flutter and Playtech is currently unknown, although the would-be seller stated it is in exclusive talks with the potential bidder.
For a considerable amount of time, Playtech has been the focus of consolidation talk, but little has come of it. That might alter if Snaitech is sold. Playtech made an unsuccessful bid to purchase 888 Holdings Plc (OTC: EIHDF) for $890 million in July 2023.
Two other bidders surfaced for the casino software company after Playtech accepted a $2.8 billion agreement with Aristocrat Technologies in October 2021, but the two ultimately withdrew their offers and the Aristocrat transaction collapsed. Plans by Playtech to reverse merge with a blank-check firm and float Caliente Interactive's Caliplay division on a US exchange were shelved in July 2022.
Playtech is drawn to selling Snaitech because it would lessen its vulnerability to erratic consumer spending trends and enable the seller to establish itself as a major business-to-business (B2B) participant in the European gaming market.
Agreement Would Increase Flutter's Presence in Italy
The prospective acquisition of Snaitech makes sense for FanDuel parent company Flutter because it would expand the buyer's footprint in Italy, the third-largest economy in the Eurozone after Germany and France.
In 2022, Flutter acquired the massive Italian lottery Sisal for $2.2 billion. Betfair and PokerStars, owned by Flutter, had a substantial market share in Italy prior to that takeover.
After the UK, Italy has the second-largest regulated gambling market in Europe. The fact that online gambling adoption in Italy has increased since the coronavirus outbreak but is still significantly lower than in similar markets like Australia and the UK adds to Snaitech's appeal to Flutter. This suggests that there is room for expansion and that Flutter's prospective long-term acquisition of Snaitech may be justified.