Betting Group Flutter Entertainment has acquired online bingo operator Tombola in a cash deal worth £402million.
The world's largest online betting group told investors today that the deal would diversify its products, expand its position in an as-yet untapped market area, add a sustainable player base and enhance Flutter's operations in its core UK market.
The Dublin-based Paddy Power, Betfair and Fanduel owner added that the deal will offer Flutter further product capabilities and expertise.
It follows a sharp decline in Flutter’s share price earlier this month after it slashed full-year after gamblers enjoyed a winning streak and it had to suspend its operations in the Netherlands.
'Unfavourable sports results in first 24 days of October' knocked £60million off Flutter’s earnings.
Tombola revenues have grown at an annual rate of 23 per cent over the last five years, generating earnings of £38.5million in the 12 months to April.
With teams primarily located in Sunderland and Gibraltar, 80 per cent of Tombola’s revenue come s from the UK, while and 16 per cent comes from Italy and Spain.
With gambling groups under pressure to make their markets less risky for punters, Flutter also noted that Tombola was the first major UK-focused operator to introduce both mandatory staking and deposit limits.
Flutter chief executive Peter Jackson said: ‘Tombola is a business we have long admired for its product expertise, highly recreational customer base and focus on sustainable play.
‘The brand aligns closely with Flutter's safer gambling strategy, a key area of focus for us. I am excited to combine Flutter's digital marketing expertise with Tombola's operational capabilities within the UK & Ireland division.’
Flutter shares rose 1 per cent in response to the announcement to 11,805p, but they remain down 24 per cent year-to-date.
Subject to clearance by the UK Competition and Markets Authority, the deal is expected to complete in the first three months of 2022.
Maintaining a buy rating and a target price of 17,000p, analysts at Peel Hunt said: ‘While the acquisition increases the exposure of Flutter to the UK, it improves its UK product mix and regulatory risk profile.’
Source: This is money.co.uk