Credit analysts from Moody’s have shared expectations that the coronavirus crisis would trigger further deals among gambling companies, such as the one between the Stars Group and Flutter Entertainment.
The projection was announced after the news that Flutter shareholders backed the Irish gambling group’s planned merger with the Stars Group to create one of the largest online gambling conglomerates on a global scale with a customer database of over 10 million individuals. According to Jeanine Arnold and Florent Egonneau, analysts at Moody’s, the coronavirus pandemic could be a contributing factor to a wave of consolidation in the gambling industry.
According to analysts, gambling operators are set to look for further growth and expanding their presence to a greater scale, with online gambling companies willing to strengthen the market positions of their businesses. Moody’s analysts further explained that companies with stronger balance sheets would also be willing to take advantage of some lower valuations that could help them increase their market share through acquisition deals.
As Casino Guardian already reported, betting turnover has been experiencing a significant decline since all major sports leagues, tournaments and competitions were postponed or cancelled because of the Covid-19 outbreak, which basically means there are no sports events for people to bet on. Despite that, Flutter Entertainment and the Stars Group did not give up on their proposed merger.
Flutter Entertainment to Proceed with Its Proposed Merger with the Stars Group
Yesterday, it became clear that the shareholders of Flutter Entertainment approved the merger deal with the Stars Group. The shareholders of the latter are set to vote on the merger later this week.
Flutter Entertainment is not rated by Moody’s as the Irish gambling operator does not have significant liabilities, as its net debt is €270 million. The company currently owns a number of gambling brands, including Australia-based SportsBet, Fanduel in the US, as well as the betting exchange Betfair. On the other hand, the Stars Group is rated as B2 stable y Moody’s, which is a high credit risk ranking, with net debt of about €4 billion. The Canadian gambling group owns brands such as PokerStars, Full Tilt Poker and SkyBet.
According to the ratings agency, some larger European gambling companies, such as Spain-based Sociedad Limitada, Codere and Cirsa, as well as Germany’s Tackle Group, would be able to survive a two-month shutdown but if the situation continues, they could face difficulties. As Casino Guardian reported, many UK gambling groups, such as GVC Holdings, are seeing rising popularity of their online gambling services at a time when sports betting is not an option.
Those of them who offer their services online would be able to survive longer in the conditions of the coronavirus crisis, but if the unprecedented lockdown is expanded, it can make them consider other options, including consolidation through merger and acquisition deals.
- Author
Olivia Cole
