Flutter Entertainment

To acquire The Stars Group

  • Sectors : Gaming
  • Companies : Flutter Entertainment

Ratings and price correct at time of issue.

  • Flutter Entertainment

    Closing Price: 7634p

  • RATING 08/05/19

  • PREVIOUS RATING 29/08/17

    NEUTRAL

DAVY VIEW

Flutter Entertainment’s proposed acquisition of The Stars Group (TSG) represents a truly transformational deal for both the company and the industry. We see strong strategic merit to the transaction. It improves Flutter’s position in key growth markets, including the US, while also bolstering scale and market position in its core (more mature) end-markets. Acquisitions of this kind are not without risk (we expect its integration approach to be different to its previous experience). Further, the deal would increase exposure to unregulated markets (Germany, Russia) and poker. However, simply put, it sets Flutter apart as a play on the attractive global gambling opportunity. The deal is expected to add at least 50% to EPS in Year 1 (pre-synergies), with return on invested capital (ROIC) exceeding cost of capital in Year 3.

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Oct 2 2019, 07:50 IST/BST

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