Flutter Entertainment CEO Peter Jackson has stated that the company is ready to “capitalise on the growth opportunity in Brazil” after announcing the acquisition of an initial 56% stake in NSX Group, a Brazilian operator whose brands include Betnacional.
As a result of the $350m cash transaction, Flutter has created a new business in the region called Flutter Brazil.
The company noted that the transaction fully aligns with its strategy to “invest in leadership positions in international markets, securing a podium position”, in the country’s regulated market upon completion of the acquisition.
Flutter added that on a standalone basis in 2024, NSX is expected to generate approximately $256m in revenue and adjusted EBITDA of approximately $34m.
Breaking down the transaction, Flutter stated that on completion, it will pay cash consideration of approximately $350m and contribute its existing Betfair Brazil business, in exchange for a 56% stake in the newly combined Flutter Brazil business.
A mechanism has also been implemented to enable Flutter to increase its shareholding through reciprocal put/call arrangements in years five and ten following the completion date.
Completion of the transaction is subject to customary regulatory clearances and is expected to close by Q2 2025.
“I am excited to announce the addition of NSX, operator of Betnacional, a leading Brazilian sports betting and igaming brand, to the Flutter portfolio,” Jackson commented.
“We believe that combining the extensive local expertise of the NSX team, our existing Betfair business and the power of the Flutter Edge, will create a compelling opportunity to capitalise on the growth opportunity in Brazil which presents an exciting runway of future growth.”
In addition to being in line with its strategy, Flutter stated that once completed, the acquisition is expected to create shareholder value across three areas:
- Delivering an enhanced competitive position in a fast-growing, newly regulated market
- Enhancing its “local hero” brand portfolio
- Opportunities to drive synergies via access to the Flutter Edge, and deliver meaningful value creation
Brazilian landscape
Regarding delivering a competitive position in the Brazilian market, Flutter provided statistics on the market, highlighting it is expected to fully regulate its online sports betting and igaming market by early 2025.
With a population of 200 million with a big interest in sports and soccer, the operator stated that there is a “strong demand for sports betting and igaming products” in Brazil, as the unregulated market has seen compound annual gross gaming revenue growth of 38% since 2018 to almost $3bn in 2023, with most the growth and market share gains occurring thanks to locally focused brands.
Flutter added that consolidation in the fully regulated market is “expected to benefit established, local operators, due to the associated tax, licensing and compliance costs” and that Flutter Brazil’s combined strength will “position it exceptionally well to capitalise” in the market.
As for enhancing its “local hero” brand portfolio, Flutter reiterated that the combination of NSX Group’s brand and its Betfair business will “create a podium position in Brazil” as NSX is the number four operator in the region with a 12% share of the sports betting market and a 9% share of the total online market.
The company also highlighted Betfair Brazil’s position, forecasting the operator to deliver approximately $70m in revenue this year.
Flutter Brazil will be led by a local management team to enable “decision-making close to the customer”, with a proprietary technology platform developed locally to allow for “a fast-paced and agile product offering”.
Regarding Flutter Edge-powered synergies and value creation, Flutter noted that NSX will be given access to the company’s proprietary pricing and risk management capabilities to deliver a differentiated sportsbook product offering, in addition to the company’s igaming expertise and content being shared to enhance the igaming experience
Flutter has forecasted that Flutter Brazil is in a good position to excel in the Brazilian regulated market, but notes that in line with its strategy in other newly regulated markets, adjusted EBITDA loss is expected next year.
The operator said: “Flutter Brazil will be exceptionally well positioned to take full advantage of the significant growth opportunity in the newly regulating Brazilian market.
“In line with our successful strategy in other newly regulated markets such as the US, we expect to drive market share growth and embed future profitability through disciplined customer investment. This is expected to result in a Flutter Brazil adjusted EBITDA loss of approximately $90-100m in 2025.”
Flutter added that it remains committed to its medium-term leverage ratio of 2.0-2.5x which allows for flexibility for it to pursue value-creating acquisitions such as NSX.
The company will further update its shareholders on the acquisition during its investor day on 25 September, where it expects to discuss its organic growth and cash generation potential in the medium term along with capital allocation opportunities.