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Lottomatica Shares Surge After Upgrading Earnings Outlook for Cirsa Merger
Shares of Lottomatica (BIT: LTMC) surged after the company provided an enhanced earnings forecast for its planned merger with Spanish casino operator Cirsa, assuaging investor concerns that had pressured the stock. The gaming operator's stock climbed 8.8% to reach €26.40 in Milan trading.
Revised Synergy Projections
In a follow-up disclosure regarding the all-stock combination announced on September 2, Lottomatica revealed it expects to generate between €200 million and €300 million of incremental online EBITDA. The company stated this would be achieved on a run-rate basis by the third year after the transaction closes.
Crucially, the company clarified that this substantial earnings potential was explicitly excluded from the initial synergy figures. The gains are expected to come from deploying Lottomatica’s technology and online product expertise across Cirsa's extensive Spanish and international markets.
Market Reversal
AdThe additional financial detail proved pivotal in reversing market sentiment. The original merger announcement triggered a steep selloff as investors reacted negatively to the dilutive nature of the all-stock deal and a lack of clarity on the integration's financial benefits.
Today's disclosure provided a clearer picture of the deal's upside, prompting a decisive rally. The stock's performance stood in stark contrast to the broader market, with the pan-European STOXX 600 trading lower and Italy's FTSE MIB opening flat amid a U.S. market holiday, underscoring that the move was driven by a company-specific catalyst.
Context of the Deal
The rally allowed Lottomatica to recoup the bulk of the losses sustained following the initial merger announcement. The updated guidance reinforces the strategic rationale for the combination, with investors now having a more concrete measure of the potential value creation from uniting the two European gaming giants.
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