Lottomatica to Merge with CIRSA: Building the Second-Largest Listed Gaming Operator

The structure is a merger by absorption under Spain’s Royal Decree-law 5/2023 and Italy’s merger rules. Lottomatica is the absorbing company and CIRSA the absorbed one. On the merger effective date, Lottomatica will allot 0.668 new shares for each outstanding CIRSA share, other than treasury shares and shares Lottomatica acquires through the cash exit right described below. "The Exchange Ratio does not include any cash component," the directors’ report says.

Before the merger takes effect, CIRSA will distribute an extraordinary dividend of €1.56 per share, charged to the share premium, corresponding to approximately €262.1 million in aggregate. The boards also allowed for ordinary dividends on the 2026 financial year, payable in 2027, of up to €100,000,000 for CIRSA and €130,000,000 for Lottomatica, in line with each company’s existing dividend policy. The two companies agreed that either both ordinary dividends are paid before the merger deed is executed or neither is, with an adjustment mechanism to the extraordinary dividend if neither is paid.

CIRSA had 167,992,667 shares outstanding, and the maximum number of new Lottomatica shares was calculated by multiplying that count by the exchange ratio. On that basis, Lottomatica shareholders and CIRSA shareholders will hold approximately 67.3% and 32.7% of the combined company respectively, and LHMC, CIRSA’s largest shareholder, approximately 24%.

The majority shareholder

LHMC Midco S.à r.l., a Luxembourg company ultimately controlled by funds managed or advised by Blackstone Inc., signed the binding agreement alongside the two companies on 1 September 2026. At that date LHMC held 124,703,495 CIRSA shares, representing 74.232% of CIRSA’s share capital. It is a party to the merger agreement only for certain specific provisions, and after completion it becomes the largest single holder in the combined Lottomatica.

Relative value, measured before synergies

The directors’ report explains how the boards arrived at 0.668. An exchange ratio quantifies the relative value, not the absolute value, of the merging companies, so the aim was to reach homogeneous and comparable values for Lottomatica and CIRSA in relative terms. Both companies were valued as independent entities on information available as at 30 June 2026, and without any value for the cost efficiencies and savings the merger is expected to produce. Every method was adjusted for the €1.56 per-share extraordinary dividend.

The primary methods were applied consistently to both companies. They included historical trading references, comparing volume-weighted average prices for the spot, 1-month, 3-month and 6-month periods up to and including 28 August 2026, and discounted cash flow analysis. As supplementary references, the boards looked at EV/EBITDA multiples from control acquisitions in the regulated gaming sector between 2021 and 2026, noting that such multiples can embed a control premium not necessarily transferred in an all-share merger, and at the consensus target prices of analysts who cover both companies.

Two independent checks sit on top of the boards’ work. Lazard Asesores Financieros, S.A., financial adviser to CIRSA, gave CIRSA’s board a fairness opinion dated 31 August 2026 on the fairness, from a financial point of view, of the exchange ratio to CIRSA shareholders other than LHMC and its affiliates. The court-appointed single expert, BDO Auditores, then reviewed both the exchange ratio and the cash exit price, as described in conditions to completion.

Put simply, CIRSA investors are paid the extraordinary dividend first and receive newly issued Lottomatica shares second, under an exchange ratio that both boards approved and the court-appointed single expert reviewed. Holders who would rather take cash than shares have the exit right set out under conditions to completion, so every investor keeps a clear choice at the extraordinary meeting.

CIRSA (opens in a new tab) is listed on the Spanish Stock Exchanges and headquartered in Terrassa, in the province of Barcelona. Its business areas, as set out on its own website, are casinos and gaming halls, slot machines, and online betting and gambling. The directors’ report puts CIRSA’s contribution to the combined pro forma at Adjusted EBITDA of €796 million, a figure that includes 12 months of contribution from recent acquisitions as of 30 June 2026.

The geography is what makes CIRSA distinctive. The addressable market the boards cite covers Italy, Spain, Panama, Colombia, Mexico, Peru, Portugal and Morocco, with the Dominican Republic, Costa Rica and Paraguay as further CIRSA markets. Outside Italy, almost all of that footprint is CIRSA’s. The directors’ report notes the very limited overlap between the two groups in the jurisdictions where they operate, which is the basis for the boards’ view that integration risk is low.

Management continuity is written into the plan. CIRSA’s current Chief Executive Officer, Antonio Hostench Feu, and Chief Financial Officer, Antonio Grau Folguera, will remain Chief Executive Officer and Chief Financial Officer of the CIRSA business after completion. CIRSA’s Executive Chairman, Joaquim Agut Bonsfills, will be appointed Honorary Chairman of the CIRSA business. The business will remain headquartered in Terrassa through CIRSA Gaming Corporation, S.A.

The directors’ report lists the key strategic benefits in eight parts. The first is global gaming leadership: the second-largest listed gaming and sports betting operator globally. The second is consolidated market leadership, described as "undisputed leadership positions in Italy and Spain, and nine leadership positions across a combined addressable market of approximately Euro 34 billion". That market figure is based on H2 Gambling Capital data from August 2026 and covers onshore online and land-based gaming, excluding lottery.

The online thesis sits at the centre of the case. The boards expect the merger to "leverage Lottomatica’s proven capabilities and omni-channel expertise to accelerate CIRSA’s online organic and inorganic expansion across its core markets". In other words, a group that has built a large online business alongside its retail network in Italy will apply the same playbook to CIRSA’s land-based footprint in Spain and Latin America.

Scale in the capital markets

Two of the stated benefits concern financing. The boards describe an enhanced capital structure, with a "robust balance sheet which will continue to support a strong credit profile", and greater scale in both equity and debt markets. The combined company is expected to access a wider investor base, with a larger free float, increased liquidity and more diversified sources of capital. The final benefit is low integration risk, resting on the limited overlap between the businesses and "two very experienced management teams".

The boards quantify three financial outcomes. First, approximately €115 million of "highly visible pre-tax cash synergies per year", made up of €101 million from opex savings and €14 million from interest cost savings, expected by the third full year after completion. Second, incremental online Adjusted EBITDA in the range of approximately €200 million to €300 million, run rate by the third full year from completion. Third, up to €4 billion of capital returns over the three years after the merger.

The capital-return target is framed through the enlarged earnings base. The combined company "is expected to deliver consistent growth and shareholder distributions", and its larger earnings and cash flow are expected to give greater capacity for dividends and share buybacks. Lottomatica’s board will propose those returns for approval at the relevant ordinary shareholders’ meetings.

These are the companies’ own forward-looking targets, and the directors’ report sets them out with the usual cautions about assumptions and integration costs. Taken together with the €796 million of CIRSA Adjusted EBITDA in the pro forma and a combined base of approximately €2 billion, they describe a group whose online growth target alone is sized at a meaningful share of today’s combined earnings.

Subject to approval at Lottomatica’s ordinary meeting, its board will grow from 11 to 13 members on the merger effective date, adding two directors designated by LHMC: Michele Rabà and Miguel García Gómez. No other changes to the board are envisaged. Guglielmo Angelozzi will remain Chairman and Chief Executive Officer of Lottomatica, and Laurence Van Lancker Deputy Chief Executive Officer. After the appointments, 8 of the 13 directors will be independent, and the current Lead Independent Director continues in office.

CIRSA shareholders who vote against the merger at the extraordinary meeting are entitled to sell their shares for cash under the cash exit right, for some or all of their shares, within 20 calendar days of the meeting. The price is €13.20 per share, the average trading price of CIRSA shares on the Spanish Stock Exchanges over the three months to the day before the merger agreement was announced, from 2 June 2026 to 1 September 2026. It is reduced euro for euro by the extraordinary dividend and any ordinary dividend CIRSA pays.

For CIRSA’s shareholders, the merger means swapping a Spanish listing for shares in an Italian joint stock company, Lottomatica, with its registered office at Via degli Aldobrandeschi 300 in Rome. New shares are allotted in proportion to each holder’s stake under the exchange ratio, and Lottomatica shares will trade on Euronext Milan and on the Spanish Stock Exchanges of Madrid, Barcelona, Bilbao and Valencia through the Spanish Automated Quotation System, so CIRSA’s existing investor base keeps a familiar market to trade on.

Ten conditions before the merger deed

Execution of the Italian merger deed is subject to ten conditions precedent. They include antitrust, foreign direct investment and gaming regulation clearances, clearance under the EU Foreign Subsidies Regulation, approval by Lottomatica’s extraordinary and ordinary meetings and by CIRSA’s extraordinary meeting, approval of the extraordinary dividend, the cash exit right not being exercised for more than 5% of CIRSA’s shares, the Italian creditor opposition period, and the listing of the new shares on Euronext Milan.

The process is already under way. On 16 September 2026 the Commercial Registry of Barcelona appointed BDO Auditores, S.L.P. as single independent expert. Its report concludes that the boards’ valuation methods for the exchange ratio "are adequate, being, in the circumstances, reasonable and not arbitrary". The boards signed the merger plan on 8 October 2026, and CIRSA’s merger page (opens in a new tab) carries the plan, both directors’ reports, the expert report and the financial statements for shareholders, creditors and employees.

Six milestones between the vote and a combined listing

• –The CIRSA vote. The extraordinary meeting expected on 25 November 2026, and take-up of the cash exit right against its 5% cap.
• –Clearances. Antitrust, foreign investment, foreign subsidies and gaming approvals in each jurisdiction, as listed under conditions.
• –Lottomatica’s meetings. Approval of the plan, the new shares and the two new directors.
• –Online delivery. Progress against the €200 million to €300 million online target.
• –Capital returns. The first proposals under the up to €4 billion programme.
• –Dual listing. Trading of Lottomatica shares on Euronext Milan and the Spanish Stock Exchanges.