IG Group Holdings Plc (LSE:IGG) shares tumbled almost 11% on Friday morning as investors reacted to the proposed acquisition of US sports-betting business Underdog for up to $1.3 billion, which will require a share issue and the pausing of its share buyback.
The trading platform will pay $963 million upfront, comprising about $583 million in shares and $380 million in cash. It will also repay approximately $160 million of Underdog debt and could pay a further $200 million depending on performance.
The shares issued will represent 6.8% of the enlarged company. IG has also paused its £125 million buyback programme, of which around £33 million had been completed.
Underdog is the third-largest fantasy sports and prediction-markets business in the US, with 11 million registered accounts and one million active users.
IG said it plans to expand its offering beyond sports into financial markets, economics and cryptocurrencies. It expects the deal to be EPS-neutral in year one and double-digit EPS-accretive in year three.
Chief executive Breon Corcoran called the deal a "decisive step" that would establish IG as a leader in US prediction markets.
The acquisition overshadowed strong first-half trading. Revenue rose 18% to £642.8 million, slightly below the £649 million consensus forecast, while adjusted earnings per share increased 21% to 68.9p, just ahead of expectations.
Net trading revenue climbed 21% to £588.8 million, although EBITDA rose only 4% to £282 million as marketing and other costs increased.
IG expects the deal to be broadly neutral for earnings in its first year and deliver a double-digit percentage uplift by year three. Full-year guidance was unchanged.
The shares fell 10.7% to 1,523.24p by late morning.
Broker Jefferies said: "The results are in line and probably will not provoke much excitement, but the acquisition is interesting, and we suspect it will play well with investors."
Analysts at Deutsche Bank Underdog is "increasingly" a prediction-markets business that remains firmly focused on sports.
They noted that Underdog generated annualized revenue of $0.5 billion and EBITDA of $0.12 billion in the first half of 2026, implying multiples of up to 2.6x revenue / 10.8x EBITDA based on the up front plus maximum earn out ($1.3 billion).
** UPDATE: Adds analyst comment **
