Lottomatica and CIRSA Merger: A New Era in Global Betting

Major Acquisition to Reshape Global Gaming and Betting Industry

Lottomatica agreed on Wednesday to buy Spanish rival CIRSA in a €2.8 billion all-share deal to create the world's second-largest listed gaming and sports betting firm after FanDuel owner Flutter.

U.S. fund Blackstone, currently the main shareholder in CIRSA, will become the single biggest investor with a 24% stake in the joint group whose adjusted pro-forma core profit is projected at about €2 billion ($2.3 billion), the companies said.

Deal Structure and Shareholder Impact

Lottomatica will pay CIRSA investors 0.668 new Lottomatica shares for each CIRSA share tendered. The exchange ratio values the Spanish firm's shares at €16.55 each - a premium of just over 21% according to Reuters calculations based on Tuesday's closing prices.

Leadership and Headquarters

Headquartered in Rome with secondary offices for CIRSA in Barcelona, the combined company will retain the Lottomatica name and will be led by the Italian firm's current chairman and chief executive, Guglielmo Angelozzi.

Financial Projections and Shareholder Returns

The merger is expected to generate €115 million of pre-tax cash benefits after three years from completion. 

During that period, the merged entity plans to return to shareholders up to €4 billion as dividends and share buybacks.

Market Reaction and Strategic Rationale

Surprise Move

SURPRISE MOVE

 Shares in Lottomatica fell 9.6% by 1030 GMT, with some traders saying the move had taken investors by surprise, as Lottomatica had so far focused on a pure online business strategy centred on Italy. 

CIRSA, which generates 53% of its core earnings from casinos and gambling halls and which needs to expand its online footprint, soared by 17%.

Management Commentary

Speaking on a call with analysts, Angelozzi said the risks associated with the transaction were limited and that CIRSA, the market leader in Spain, did not require any turnaround.

"What you get with this deal is stable and predictable growth," he said.

Stock Market Listings

The merged entity will be listed on Euronext Milan and Spanish stock exchanges.

Analyst Perspectives

"The transaction appears strategically compelling: Lottomatica is using its equity to acquire a lower-valued business ... while retaining 67.5% of the combined entity," JPMorgan analysts said in a note.

"Having executed exceptionally well in Italy - where it is the number one in an attractive, growing market - we see Spain as a logical next leg of growth."

Closing Timeline and Advisory Teams

Deal Completion and Extraordinary Dividend

Before closing, which is expected in the second quarter of 2027 and remains subject to approval by the shareholders of both companies, CIRSA will pay an extraordinary dividend of €262 million to its shareholders.

Financial Advisers

 Evercore, PJT Partners, Deutsche Bank and Mediobanca were Lottomatica's financial advisers. CIRSA was advised by Lazard.