Investors eye merger fears as Flutter announces results
BETTING GIANT Flutter Entertainment, which is hoping to complete a £10bn merger with Leeds-based Sky Bet’s owner The Stars Group, is expected to report a £300m leap in sales this week.
Flutter, formerly known as Paddy Power Betfair, could become the biggest betting firm in the world after it agreed a £10bn merger with The Stars Group.
However, the deal is still up in the air after the Competition and Markets Authority opened a probe into the mega-merger at the beginning of February. The regulator has until the end of March to either clear the deal or launch an in-depth investigation.
Flutter might struggle to make the leap in sales count, as it is likely to see a drop of more than 15 per cent in earnings.
Earlier this month the head of the Gambling Commission told MPs that he would, within six months, decide whether to limit the stakes that people can put down when gambling online.
Politicians called for a £2 limit on each bet in November, causing shares to plummet in most major gambling firms. They described gambling addiction as a “public health crisis”.
Peel Hunt analysts Ivor Jones and Douglas Jack said: “Flutter’s biggest risk is UK online... being hit by regulation.
“We expect commentary on the 2019 financial year results to be overshadowed by any discussion about the potential benefits of The Stars Group merger.”
In November, Flutter said that it expects earnings to be between £420m and £440m, excluding the loss-making US business. It has improved the outlook for losses in the US to between £40m and £45m, against previous guidance of £55m.
Analysts now expect earnings outside the US will reach £423m, towards the lower end of guidance, while US losses will hit £44m. This would mean that the measure reaches £379m for the group as a whole.
Analysts at the Share Centre said: “Flutter, formerly Paddy Power Betfair, has seen the common trend of declining revenue from its high street shops offset by growth in online gambling and gaming.
“Given its sheer scale, that was always likely to attract the attention of competition authorities in several countries and sure enough the UK’s CMA has recently announced a review of the deal. Beyond that any comments on prospects in the US will also be very much of interest given the trend towards deregulation of sports betting there.”