Flutter Entertainment has completed the acquisition of a 56% stake in NSX Group, the operator of the well-known Brazilian brand Betnacional. This initial acquisition is a key move in establishing the new branch "Flutter Brazil," with plans to complete the acquisition by the second quarter of 2025.
According to the terms of the agreement, Flutter will provide $350 million in cash and will integrate its existing Betfair business into the new Brazilian division. Additionally, the agreement includes terms that allow Flutter to potentially increase its stake on the fifth and tenth anniversaries of the transaction's completion.
Strategic Move:
NSX Group operates Betnacional and manages other brands such as Pagbet, MrJack.bet, and Betpix, covering the iGaming and sports betting sectors. By 2024, NSX is expected to generate nearly $256 million in revenue, with an adjusted EBITDA of about $34 million. According to analysis by Regulus Partners and internal assessments, since its establishment in Brazil in 2021, NSX has grown to hold 12% of the country's sports betting market and 9% of the overall online market.
Flutter believes that acquiring NSX is a strategic move aligned with its broader business objectives and expects this move to enhance shareholder value. Flutter CEO Peter Jackson stated in a company press release: "We believe that combining NSX's rich local expertise, our existing Betfair business, and the powerful capabilities of Flutter Edge will create a highly attractive opportunity to fully leverage Brazil's growth opportunities, providing an exciting runway for future growth."
This acquisition aims to strengthen Flutter's competitive position in rapidly growing and newly regulated markets. The online sports betting and iGaming industry in Brazil is expected to be fully regulated by January 2025, and Flutter anticipates that the merged entity will be well-positioned to capitalize on market opportunities.
Flutter's Localization Strategy: Emphasizing "Local Hero" Brands
This acquisition aligns with Flutter's "Local Hero" strategy, which focuses on adding mature, locally recognized brands to its portfolio. This strategy aims to ensure a leading market position in Brazil. The new Brazilian business is expected to benefit greatly from a strong local management team, which will promote flexible, customer-oriented decision-making. It also gains an advantage with a proprietary technology platform developed in Brazil.
Flutter also expects that this acquisition will drive synergies by integrating NSX into the Flutter Edge technology framework. This integration is expected to enhance revenue by granting NSX access to proprietary pricing and risk management tools, thus offering unique sports betting products.
The company stated: "Flutter Brazil will be in a very advantageous position to fully exploit the tremendous growth opportunities in the newly regulated Brazilian market." Consistent with its strategy in other newly regulated markets like the USA, Flutter expects to increase market share and ensure future profitability through a rigorous customer investment strategy, anticipating an adjusted EBITDA loss for Flutter Brazil of about $90 to $100 million in 2025.
Flutter will provide further updates on this acquisition at the Investor Day on September 25.
