Posted on: November 18, 2021, 09:39h.
Last updated on: November 18, 2021, 09:39h.
Flutter Entertainment has reached a definitive deal to purchase Tombola Limited, the UK’s largest online bingo and soft game operator. The acquisition will cost approximately $541.53 million.
The headquarters of Sunderland-based Tombola, seen above, will now become part of Flutter Entertainment’s growing network of companies. (Image: BCSA)
Flutter will now diversify its games collection and increase its market share within the UK, where Tombola makes 80% of its turnover.
A statement from the global gaming giant, which recently lost a $300-million judgment in Kentucky over PokerStars’ presence in the state years ago, explained, “In its financial year to end April 2021, Tombola generated pro forma revenue of £164m ($220.95 million) and EBITDA of £38.5m ($51.86 million). Under the terms of the transaction, Flutter will pay £402m in cash upon completion for 100% of the business.”
Tombola To Serve Flutter’s Ambitions
Tombola was founded by Phil Cronin in 2005. It advocates for sustainable play to protect its more than 400,000 monthly players and has been awarded the title of UK’s best value operator.
The unique distinction of the bingo room, which was built in-house, is that it was the first major UK brand with deposit and mandatory staking limits. This dynamic was highlighted by Flutter as one of the key elements behind the acquisition.
Tombola, located in Sunderland, has been recognized as one of the top employers and workplaces in the Northeast of England.
Flutter emphasized the strategic importance Tombola and added that Tombola will be able to secure new assets for its portfolio, which will allow the FTSE group to expand its position within the “product vertical” in which it is historically under-indexed.
Flutter CEO Peter Jackson commented that Flutter was delighted to welcome Tombola to its ranks. He stated that the company has always admired Tombola for its product expertise and highly recreational customer base, as well as its 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 CEO Peter Jackson.
The acquisition of Tombola will be complete by Q1 2022 trading. This is subject to merger control clearances from the UK Competition and Markets Authority.
Flutter Continues to Receive Analysts’ Support
The acquisition is likely to give Flutter another boost and more optimism among industry analysts. The cost is below what much of the M&A activity in the gaming industry is commanding these days, and the company, based on the figures, could begin to see an ROI sooner than expected. Flutter, which has repeatedly been seen as a high-value stock with continued upward momentum, could see additional optimism from analysts surface as a result of the purchase.
However, it will have to find some corrections first. In its latest earnings report, Flutter indicated that it saw year-on-year revenue growth of 9% between the third quarter of 2020 and 2021. While that was good news, the company’s exit from the Dutch market, as well as potential legal attacks, could cause long-term damage. Its year-on-year revenue increased by 152.89%; however, its net income fell by 82.59%.
Trading on the London Stock Exchange, the company has seen steady declines in its stock price since around the middle of September.