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October 2, 2019

Flutter Entertainment Buys The Stars Group (TSX:TSGI)

Disclaimer: The writer of this article may have positions in the securities mentioned in this article. The fact they hold positions in securities has had no impact on the production of this article

By Dylan Callaghan

October 2, 2019

Canadian stocks in a slump today didn’t hold down Stars Group Inc (TSGI.TO) from skyrocketing up over 30% by the end of the day.

The stock shot up after news of an acquisition of the online gaming company that holds Poker Stars within its portfolio by Flutter Entertainment, the bookmaking company headquartered in Dublin Ireland.

The companies will be meshing their management teams and plan to create a more diversified, all encompassing business for their shareholders that not only includes online poker but also other online gaming and sports betting avenues.

Stars Group is worth 9 billion dollars as per the agreement between the company and Flutter Entertainment. The combination of the two organizations would result in one of the largest online gambling and book making companies in the world.

A venture is also underway between Stars Group and Fox Sports in launching a betting platform in the US. Pending approvals, this deal would continue under the new merger of Stars Group and Flutter.

The Stars Group management has said that they believe the deal will create extensive value for their current shareholders and are excited to work with Flutter moving forward.

Digital gaming is exploding

Realistically, online gaming and bookmaking has the odds in their favor in a big way. They have an edge that some gaming companies do not. And that is the ability to expand digitally. The world is their oyster, simply housing computer servers instead of people as a brick and mortar gaming company must do.

They also don’t have to lure people into casinos or sporting events, when they can access them via a computer or mobile device.

Stars Group is currently trading at 1.31 times book value and 13.73 times forward earnings. With quarterly revenue growth year over year of 54.90%, the stock is trading at relatively cheap valuations.

An exciting deal no doubt. Who knows what the future holds for online based gambling platforms, but they have positioned themselves well to take advantage of any technological advancements in the digital world.

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Dylan Callaghan


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