Flutter Entertainment plc FLUT shares are trading at a lower premarket on Friday. The company disclosed the acquisition of an initial 56% stake in NSX Group for around $350 million.
NSX is a Brazilian operator with a portfolio of brands, including the flagship Betnacional sports betting and iGaming brand.
The transaction aligns with Flutter’s strategy to invest in leading positions in international markets, positioning it as a significant player in the rapidly growing Brazilian market.
As per the transaction agreement, Flutter will pay around $350 million in cash and contribute its existing Betfair Brazil business to acquire a 56% stake in the newly combined Flutter Brazil business.
Additionally, a mechanism will allow Flutter to increase its shareholding through reciprocal put/call arrangements in the fifth and tenth years following the completion date.
The transaction is subject to customary regulatory approvals and is expected to close by the second quarter of 2025.
On a standalone basis, NSX anticipates to generate approximately $256 million in revenue and $34 million in adjusted EBITDA in 2024.
The company expects revenue synergies to be realized by leveraging Flutter’s proprietary pricing and risk management capabilities to enhance NSX’s sportsbook offering, as well as sharing Flutter’s iGaming expertise and content to improve the iGaming experience.
Following the successful approach in other newly regulated markets like the U.S., the company aims to drive market share growth and establish future profitability through strategic customer investment.
This is expected to result in an adjusted EBITDA loss of approximately $90 million – $100 million for Flutter Brazil in 2025.
As of June 30, Flutter’s cash and cash equivalents stood at $3.2 billion.
Price Action: FLUT shares are down 0.68% at $218.01 premarket at the last check Friday.
Image via Shutterstock
Read Next:
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
