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Flutter Entertainment Buys The Stars Group (TSX:TSGI)

Posted on October 2, 2019 by Dylan Callaghan

Disclaimer: The writer of this article or employees of Stocktrades Ltd may have positions in securities listed below. Stocktrades Ltd may also be compensated via affiliate links in the post below.

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. Those who are new to investing and buying stocks often tend to over exaggerate the implications of these types of events however.

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.

Dylan Callaghan

About the author

Dylan is the co-founder of Stocktrades.ca and an avid self-directed investor. He holds a portfolio of Canadian growth and dividend growth stocks, and believes that anyone, regardless of financial status, stands to benefit from investing in the stock market. His ultimate goal with his writing and the continual development of Stocktrades.ca is to create a resource that helps Canadians, and investors from around the world, make more money and retire earlier.