The Lottomatica-Cirsa merger and the unexpected alliance with Spain in the gaming sector

Whilst Italy and Spain are increasingly at loggerheads over the Ceuta case and Rome’s request to extend the Schengen suspension, an unexpected alliance between the two countries has been forged in the gaming and betting sector. Business is business. Geopolitics has nothing to do with it here, although one cannot help but notice that the United States is involved in this major deal, given that the Blackstone Group is the majority shareholder in Cirsa, the Spanish company with which the Italian firm Lottomatica announced a proposed merger yesterday morning. Cirsa is one of the largest operators in the gambling, sports betting and casino sectors in Spain and Latin America. In the new group that is to be formed, Blackstone will retain a 24 per cent stake, with a commitment not to sell for at least three months.

Following the news, Cirsa shares rose by 20 per cent on the Madrid Stock Exchange, whilst Lottomatica shares fell by 7.63 per cent on the Milan Stock Exchange. This suggests that Lottomatica’s investors – largely international investment funds – felt, for some reason, that they were being penalised, even though most analysts described the deal as a good move (Equita explained that, at Lottomatica’s current prices and including the dividend, Cirsa is valued at 18.1 billion, representing a 30 per cent premium on Tuesday’s closing prices)However, while European-wide bank consolidation makes governments’ skin crawl, the gaming sector’s consolidation does not seem to pose any particular problems, even at a time when relations between Italy and Spain are not particularly cordial. The merger between Lottomatica and Cirsa will create one of the world’s largest gaming players, with its headquarters in Italy and a secondary office in the province of Barcelona. This may well have been a factor, at least on the Italian side, in facilitating the agreement between the two companies, which are, in fact, complementary from a business perspective; the merger can therefore foster efficiency and synergies. Italy and Spain, then, may be at loggerheads over migrants but are making peace when it comes to gambling.