Flutter, Skillz Named as Takeover Targets as Gambling M&As Continue

Gambling powerhouse Flutter Entertainment and mobile esports company Skillz are possible acquisition targets, according to recent reports, as consolidation in the casino and sports betting sector shows little sign of easing.

Last week, three industry sources told Sarah Cohen of M&A news outlet CTFN that merger and acquisition activity in the casino and online gambling sectors will continue and that the above two companies are eyed by potential buyers.

Las Vegas casino giant MGM Resorts International and an unidentified technology company were mentioned in the CTFN article as possible suitors for Skillz.

The mobile esports provider began trading on the New York Stock Exchange late last year. It went public through a combination with special purpose acquisition company Flying Eagle Acquisition Corp., skipping the hassle of a traditional IPO.

However, according to analysts, any possible buyer that might emerge for Skillz is reaching for a falling knife as the San Francisco-based firm is among a growing list of peers that have gone public via SPAC deals and are currently experiencing a continued share price decline.

Shares in the mobile-focused provider have sunk 47.5% since the beginning of the year and are well below its February all-time highs.

Flutter Makes an Unusual Pick for Takeover Target

Flutter, which owns major online gambling brands such as Betfair, PokerStars, Sky Bet, and US sports betting leader FanDuel, is a slightly surprising takeover candidate. The company’s current market capitalization is in the region of $32 billion, which means that a possible suitor must have some very deep pockets to be able to afford buying the international gambling powerhouse.

Flutter completed the acquisition of The Stars Group for $12 billion just over a year ago. And given its M&A history and $1.26 billion in cash available after the second quarter of the year, it is more likely to be a buyer than a takeover target.

The company currently owns a 95% stake of FanDuel which is said to have a 45% share in the US regulated sports betting market. Flutter previously revealed plans to spin out and float the US-focused sports betting brand this year but then stalled those plans until 2022 amid a managerial shake-up and a legal row with Rupert Murdoch’s Fox Corporation over the latter’s stake in the business.

MGM’s mention as a potential Skillz suitor was also a bit surprising. Aside from land-based casinos, the company also runs the BetMGM online gaming and sports betting brand in partnership with European gambling powerhouse Entain.

The casino operator earlier this year made an $11 billion offer for its wagering joint venture partner, which Entain declined as too low. According to recent reports MGM might be looking to renew its effort to acquire the other gambling company.

With its focus on mobile games and esports tournaments, Skillz does not seem like a great match for MGM and is a better fit for a more technology-oriented business.

Source: MGM Could Make Run at Skillz and Flutter, Says Report, Casino.org, August 23, 2021