Gambling powerhouse Flutter Entertainment and mobile esports company Skillz are recent reports as potential acquisition targets as consolidation in the casino and sports betting sectors shows little sign of easing.
Last week, three industry sources told Sarah Cohen of M&A news agency CTFN that the merger and acquisition activities in the casino and online gambling sectors will continue and that the above two companies are being watched by potential buyers.
Casino giant in Las Vegas MGM Resorts International and an unidentified technology company were mentioned in the CTFN article as potential applicants for Skillz.
The mobile eSports provider started trading on the New York Stock Exchange late last year. It went public through a combination with Special purpose vehicle Flying Eagle Acquisition Corp.to skip the hassle of a traditional IPO.
According to analysts, however, any potential buyer who could emerge for Skillz is reaching for a falling knife as the San Francisco-based company is on a growing list of competitors who have gone public via SPAC deals is currently experiencing a sustained decline in prices.
The share of the provider, which is focused on mobile communications, has fallen by 47.5% since the beginning of the year and is well below the all-time highs of February.
Flutter makes an unusual choice for the acquisition target
Flutter, which includes major online gambling brands like Betfair, PokerStars, Sky Bet and the US sports betting guide FanDuel, is a somewhat surprising takeover candidate. The company’s current market capitalization is in the range of $ 32 billionwhich means that a potential suitor would have to have some very deep pockets in order to be able to afford the international gambling powerhouse purchase.
flutter has completed the acquisition of The Stars Group for $ 12 billion a little over a year ago. And given its M&A history and $ 1.26 billion in cash available after the second quarter, it’s more of a buyer than an acquisition target.
The company currently owns a 95% stake in FanDuel, which is allegedly a 45% share of the regulated US sports betting market. Flutter had previously announced plans to spin off and sell the U.S.-focused sports betting brand this year, but then put those plans on hold until 2022 due to a management reorganization and a legal battle with Rupert Murdoch’s Fox Corporation over its involvement in the deal .
The mention of MGM as a potential Skillz admirer was also somewhat of a surprise. Aside from land-based casinos, the company also operates the BetMGM brand for online gaming and sports betting in partnership with European gaming company Entain.
The casino operator opened one earlier this year $ 11 billion offer for its betting joint venture partner, which Entai declined as being too low. Recent reports suggest that MGM may try to renew its efforts to acquire the other gambling company.
With its focus on mobile games and esports tournaments, Skillz doesn’t seem to be a good fit for MGM and is a better fit for a more tech-driven business.
Source: MGM could run at Skillz and Flutter, Report says, Casino.org, August 23, 2021