Lottomatica’s stock experienced a significant decline of 10% following the unexpected announcement of a merger with the Spanish gaming company Cirsa. In contrast, Cirsa’s shares rose by 15% on the Madrid stock exchange. The merger, which is entirely based on a stock exchange agreement, is set to establish the second-largest global operator in the gaming sector, with plans for the new entity to be listed in both Milan and Madrid.
A trader noted that the market was caught off guard by Lottomatica’s strategic shift, particularly at a time that may not be favorable for such operations. Initially, Lottomatica’s stock had a strong start, as some investors entered the market amid a wave of optimism. However, after a brief surge, profit-taking occurred, leading to the decline.
Equita, a financial services firm, described the merger as an interesting move, as it provides access to a less mature market like Spain, solidifies Lottomatica’s position in Italy, and creates clear synergy opportunities without compromising attractive returns for shareholders. However, the valuation for Cirsa has been considered generous. At current prices for Lottomatica and including dividends, the Spanish company is valued at €18.1, which reflects a 30% premium compared to its closing prices from the previous day.
Intermonte, another financial analysis firm, identified several factors that have influenced Lottomatica’s stock performance. These include the limited familiarity with Cirsa and the Spanish market, potential risks associated with the 24% stake in the new Lottomatica-Cirsa entity held by Blackstone, which has a lock-up period of only three months for selling its shares. Additionally, Cirsa’s exposure to casinos, which accounts for 53% of its gross margin, and its operations in Latin American markets have raised concerns. Antitrust issues are also a consideration, with the closing of the merger expected in the second quarter of 2027.
Guglielmo Angelozzi, the president and CEO of Lottomatica, stated that the merger confirms the company’s growth prospects in the medium term without undermining Lottomatica’s overall structure and business model. He emphasized that the merger allows access to the positive aspects associated with such operations. Angelozzi further explained that the Spanish market is fragmented and offers various opportunities, noting that Cirsa’s growth has been predictable over the years. He expressed confidence that the merger does not pose risks to Lottomatica’s growth model.
As the market continues to react to the news, analysts and investors will be closely monitoring the developments surrounding the merger and its implications for both Lottomatica and Cirsa in the competitive gaming industry.
Source: affaritaliani.it
