With the successful integration of bwin, GVC Holdings' (MU:GVC) FY16 pro forma results delivered strong 9% net gaming revenue (NGR) growth and high underlying cash flow generation. 2017 has started well: group NGR is up 15% ytd, €125m cost synergies are on track and GVC has announced a second special dividend (15.1c). The group’s combined scale and diversification has significantly reduced risk, with 69% of revenues derived from regulated and/or taxed markets. The stock trades at 10.5x EV/EBITDA and 14.7x P/E for 2017e, at the top end of its broader peer group.
bwin bedded down
The acquisition of bwin in February 2016 marked a step change in scale and diversification, creating a top four global online gambling company. 55% of total net gaming revenues (NGR) is now derived from regulated markets and 2016 results confirmed the successful integration of the two businesses. Cost synergies of €55m were achieved by year-end 2016 and the run rate of €125m is expected by Q417. In addition, with bwin’s well-invested platform and strong brands, there is significant scope for continued revenue synergies in the form of cross-sell.
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