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CONSUMER STAPLES: Flutter (FLTR Ba1/BBB-/BBB): Snaitech Follow-Up

CONSUMER STAPLES
  • Flutter released 2Q24 results after our close. The leverage ratio improved to 2.6x, noting it’s now close to the 2-2.5x target range.
  • In response to a broad question on M&A and leverage, Flutter CEO Peter Jackson said they would go beyond the 2-2.5x leverage target for the right deal, if they have confidence they can deleverage quickly.
  • As we noted earlier, at the reported £2bn valuation, acquiring Snaitech could push leverage up meaningfully; FY24 EBITDA guidance is $2.5bn at midpoint.
  • Assuming synergies and considering acquired EBITDA, this would be less than 1x turns even if fully debt funded. Assuming a commitment to deliver given the comments above, it’s plausible that rating agencies would give leeway, particularly considering a proven M&A track record. We see no mention of potential asset sales
  • Spreads are now -6bp on the day having been -12bp pre headlines.
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