Shares in Paddy Power Betfair owner Flutter Entertainment (FLTR) added 1% to £117.90 after it announced the acquisition of leading bingo operator Tombola for £402 million including debt.
Tombola is a successful bingo-led operator with 80% of its revenues generated from the UK, 16% from Italy and Spain and 4% from other markets including Sweden and Denmark.
The company has built a ‘highly sustainable’ player base over the last 16 years and attracts on average over 400,000 monthly players. Revenues have grown at a compound annual growth rate of 23% a year over the last five years.
In the latest financial year to April 2021 the business generated revenues of £164 million and EBITDA (earnings before interest, taxes, depreciation, and amortisation) of £38.5 million, implying an EV to EBITDA multiple of 10.4 times.
STRATEGIC BENEFITS
Flutter said the acquisition enhances its online gaming presence in the UK while also expanding its product offering capabilities and expertise.
Analyst Paul Leyland at gambling consultancy Regulus Partners believes the acquisition brings benefits which are hard to replicate organically or through other mergers and acquisitions.
Leyland said: ‘Rather like the DraftKings - Golden Nugget acquisition, we see this as a compelling bolt-on generating highly attractive strategic and operational synergies, with little hope or good fortune required to ensure significant sustainable value is added to the group.’
INCREASED INTEREST IN PLAYTECH
In other gambling sector news today, software company Playtech (PTEC) confirmed that a third party had entered the fray to potentially acquire the company, sending the shares 5% higher to 774p.
Playtech said it has received a preliminary approach from JKO Play limited, a party controlled by Mr Eddie Jordan and Mr Keith O'Loughlin.
This follows on from news earlier in the month that Chinese private equity firm Gopher was in discussions with the company regarding a possible takeover.
ROLLING THE DICE
On 17 October Playtech agreed to be acquired by Australian listed gaming company Aristocrat Leisure for 680p per share in cash which shareholders are due to vote upon at a meeting scheduled for 12 January 2022.
Playtech said today it was working with Aristocrat to implement the proposed acquisition and noted that Aristocrat had committed certain funds and completed an equity raise of Aus$1.3 billion.
With the shares trading around 15% higher than the offer on the table investors are betting that a higher price is needed to secure the deal.
