Flutter Entertainment PLC (LSE:FLTR)’s €2.3 billion acquisition of Playtech PLC (LSE:PTEC)’s Snaitech gaming business in Italy is around €70 million below Peel Hunt’s sum-of-the-parts valuation for the business, the broker has stated.
This in turn implies a 5% lower price of Playtech stock than Peel Hunt’s 1,000p target price.
However, the broker noted that Playtech’s intention to return up to €1.8 billion to shareholders via a special dividend should offset this.
“We expect the share price to react positively today as it is clear that Playtech has come out of the period without communication and can start to lay out the investment stall for its continuing B2B business,” said Peel Hunt.
Conversely, Playtech shares dipped 3% following the disposal announcement.
Nonetheless, the broker reiterated its buy recommendation and 1,000p price target.