REG - Flutter Entertainmnt - Acquisition of MaxBet

Flutter EntertainmentAnnouncement

27/09/2023 07:00

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RNS Number : 8103N  Flutter Entertainment PLC  27 September 2023

 

 

27 September 2023

Flutter Entertainment plc

Acquisition of MaxBet, #2 sports betting and gaming operator in Serbia

Flutter Entertainment plc ("Flutter") is pleased to announce the acquisition
of an initial 51% stake in MaxBet, Serbia's #2 omni-channel sports betting and
gaming operator for a cash consideration of €141m (£123m). Flutter also has
the opportunity to acquire the remaining 49% in 2029(1).

MaxBet will provide Flutter with the platform to access fast-growing markets
via a strong podium brand. This also creates an opportunity to accelerate
growth and deliver a gold medal position for Flutter through expansion in the
Balkans region by leveraging the benefits of the Flutter Edge.

MaxBet has built a strong omni-channel presence within its core Serbian
market. Leveraging its growing retail presence, MaxBet has successfully
capitalised on the fast-growing online market in Serbia which grew by 25% on a
compound annual basis over the last 5 years. During LTM to June 2023, the
business generated pro forma fully regulated revenue of €145m of which 44%
is online(2), with Adjusted EBITDA of €32m.

This acquisition of MaxBet fully aligns with Flutter's key strategic criteria
for value creative M&A:

1.   Provides an enhanced competitive position in fast growing, regulated
markets:

‒    Serbia is an attractive, regulated market (2022: €700m) with
relatively low online penetration of circa 35% and expected online compound
annual growth to 2025 of approximately 15%(3).

‒    Market dynamics within the Balkans region typically create
competitive moats for omni-channel operators due to cash-led economies as well
as the importance of retail footprints.

 

2.   Adds a "local hero" brand to the Flutter portfolio:

‒    MaxBet is the #2 Serbian operator with an estimated 20% online
share(3). It has over 400 retail outlets across four markets, a well-known
local brand and 95k online average monthly players.

‒    A strong management team and 2,400 employees provide significant
local market expertise. This capability underpins a strong execution on
cross-sell and online expansion, despite low levels of marketing spend.

 

3.   Presents a clear opportunity to add the benefits of the Flutter Edge
and deliver tangible revenue synergies through:

‒    Access to digital marketing expertise to enhance customer
acquisition and retention.

‒    Flutter's global proprietary pricing and risk management
capabilities to deliver a differentiated sports betting product.

‒    Unparalleled gaming content and innovation for an improved gaming
experience.

‒    Flutter technology to increase the scalability of MaxBet's platforms
and enhance its product offering.

The transaction is subject to customary regulatory clearances and is expected
to close in Q1 2024.

Peter Jackson, Flutter Chief Executive, commented:

"I am excited to announce the addition of MaxBet to the Flutter portfolio.
This acquisition continues our progress against the strategic priorities we
have set for our International division; to buy and build podium positions in
regulated markets. We believe MaxBet is an excellent opportunity to replicate
the success we have achieved in markets like Georgia, India and Italy by
acquiring a strong brand in a podium position, where we see a compelling
opportunity to combine that extensive local expertise with the power of the
Flutter Edge to accelerate and transform growth."

 Contacts:

 Investor Relations:
 Paul Tymms, Investor Relations             + 44 75 5715 5768
 Ciara O'Mullane, Investor Relations        + 353 87 947 7862
 Liam Kealy, Investor Relations             + 353 87 665 2014

 Press:
 Kate Delahunty, Corporate Communications   + 44 78 1077 0165
 Lindsay Dunford, Corporate Communications  + 44 79 3197 2959
 Rob Allen, Corporate Communications        + 44 75 5444 1363
 Billy Murphy, Drury Communications         + 353 1 260 5000
 James Murgatroyd, FGS Global               + 44 20 7251 3801

( )

1 Payment of €141m is on a debt and cash free basis. A further payment may
be made if MaxBet exceeds its expected financial performance in 2023. A
mechanism has been put in place to acquire the remaining 49% in 2029 on
similar terms.

2 Revenue includes net gaming revenue from sports betting and gaming
activities as well as other revenue primarily from food and beverage sales in
MaxBet retail outlets. MaxBet operates omni-channel operations in Serbia,
Bosnia and Montenegro as well as a retail only footprint in North Macedonia.
During LTM to June 2023, the company delivered 89% of revenues from Serbian
operations.

3 Market size, online penetration and market share based on net gaming revenue
and using management internal estimates.

 

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