Flutter Entertainment PLC (LSE:FLTR)’s takeover of Italian retail and online gaming company Sisal may have ‘suboptimal’ timing but will bring plenty of benefits, say Deutsche Bank, as it is upgraded to a buy.
The £1.6bn deal was initially announced in December and since then the global financial economy has collapsed in the face of inflationary pressures onset by war in Ukraine.
Nevertheless, Deutsche Bank believes the overall deal is a “sensible move,” as it will give the FTSE 100 gambling company a “market-leading position in the dynamic Italian market.”
Further to that, it allows Flutter to diversify away from the UK and the regulatory uncertainties that come with it as well as provide scope for revenue synergies by upgrading Sisal’s product offering.
"The deal is materially value-enhancing, largely offsetting the likely impact of the imminent UK Gambling Act review," said analysts at the bank.
Given the bank deems the deal a strong strategic fit with a sensible valuation, Flutter received a target price hike, up from 13,450p to 13,820p.