27th Sep 2023 14:09
(Alliance News) - Flutter Entertainment PLC on Wednesday struck a deal to acquire a majority stake in a gambling operator in Serbia, a market which analysts noted has the potential to register fast growth.
It acquired an initial 51% stake in Serbian sports betting and gaming operator MaxBet for EUR141 million in cash.
The Paddy Power owner said it also has the opportunity to acquire the remaining 49% in MaxBet in 2029.
Flutter said MaxBet will provide it with the platform to access "fast-growing markets via a strong podium brand", and to accelerate growth through expansion in the Balkans region by leveraging the benefits of the Flutter Edge.
The transaction is expected to close in the first quarter of 2024, Flutter said, subject to customary regulatory clearances.
The deal is an example of the FTSE 100 listing walking on a "well-trodden path" again, according to investment bank Jefferies.
Flutter has a habit of buying into a "podium position player in a regulated market", Jefferies said.
Flutter noted MaxBet is the number two "omni-channel sports betting and gaming operator" in Serbia.
Jefferies also believes the value of the acquisition "looks reasonable compared to other sector deals".
Jefferies also noted the room for growth in Serbia.
"The EUR700 million regulated Serbian market is characterised by low online penetration [around 30%] and an expected online compound annual growth rate of 15% to 2025. Markets in the Balkans generally create competitive moats for omni-channel operators due to cash-led economies and the importance of a retail presence," Jefferies explained.
Irish broker Davy also noted the "good growth prospects" in the Serbian market.
"The Serbian market has relatively low online exposure, and we would expect the expertise from the wider Flutter group to accelerate MaxBet's online growth via product innovation and improved technology," Davy added.
"Although small in a wider group context, this looks a good acquisition in a growth market at an attractive multiple."
Flutter shares were 0.5% higher at 13,720.00 pence each in London on Wednesday afternoon.
By Eric Cunha, Alliance News news editor
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