Lottomatica and CIRSA sign merger plan with shareholder votes set for 23 and 25 November

Lottomatica Group S.p.A. and CIRSA Enterprises, S.A. approved a common merger plan on 8 October that formalises terms first announced on 2 September: 0.668 new Lottomatica shares per CIRSA share, a €262 million extraordinary CIRSA dividend before completion and an intended €744 million capital return from Lottomatica after completion. Lottomatica's shareholders vote on 23 November and CIRSA's on 25 November; Blackstone-controlled LHMC Midco, which holds 74.232% of CIRSA, is irrevocably committed to vote in favour.

Deal mechanics and the exchange ratio in the merger plan

The signed draft sets CIRSA to be absorbed into Lottomatica and extinguished without liquidation. Applied to CIRSA's 167,992,667 shares, the 0.668 ratio converts into up to 112,219,102 new Lottomatica shares, according to Lottomatica's directors' report on the merger. That allocation leaves Lottomatica's pre-deal shareholders with about 67.3% of the combined company and CIRSA stakeholders with 32.7%, a small shift from the September projection (67.5% / 32.5%) driven by Lottomatica's ongoing buyback.

BDO Auditores, appointed by the Barcelona Commercial Registry as independent expert, confirmed the fairness of the exchange ratio and the adequacy of the cash exit price on the same day the boards approved the plan. Evercore and PJT Partners provided fairness opinions for Lottomatica, while Lazard advised CIRSA shareholders other than LHMC Midco.

Cash elements: €262m dividend, €744m capital return and exit mechanics

CIRSA will pay an extraordinary dividend of €1.56 per share, about €262 million, before completion. Lottomatica intends to propose a €744 million capital return after the merger by one or a combination of a special dividend and a partial tender offer for its own shares.

CIRSA shareholders who oppose the merger can exercise a cash exit at €13.20 per share, the three-month average closing price to 1 September set by Spanish law, less any dividend received. Applied to the share count, exits above 5% of CIRSA would cause the transaction to fall away; the plan makes clear the deal lapses if exits exceed that threshold. On 8 October, CIRSA closed at €17.70 and Lottomatica at €24.41, while CIRSA had closed at €13.64 on 1 September. Using the exchange ratio plus the €1.56 dividend, the arithmetic value is about €17.87 per CIRSA share on these closes, making the €13.20 exit roughly 25% below that combined value.

LHMC Midco, controlled by Blackstone funds, would receive 83,301,935 shares in the combined company, representing about 24.3% of voting rights, subject to a three-month lock-up and the right to designate two of 13 directors.

Timetable, shareholder meetings and regulatory clearances

Lottomatica convened its shareholders' meeting for 23 November at noon, to be held solely by telecommunication; observations from shareholders, creditors and employee representatives are due by 18 November. CIRSA has called an extraordinary meeting in Terrassa for 25 November, with a second call on 26 November, as disclosed in its filing with Spain's Comisión Nacional del Mercado de Valores (CNMV). LHMC and certain CIRSA managers have irrevocably committed to vote in favour at those meetings.

The merger deed cannot be executed until a set of conditions are satisfied or waived: antitrust clearances, foreign direct investment approvals including Italy's golden power regime, clearance under the EU Foreign Subsidies Regulation, any gaming approvals required, the two shareholder votes, approval of the CIRSA special dividend, exits of no more than 5%, the end of the opposition period for Lottomatica's creditors, and admission of Lottomatica's shares to trading in Madrid, Barcelona, Bilbao and Valencia. The companies state they have filed notifications with Italy's Autorità Garante della Concorrenza e del Mercato (AGCM), Spain's Comisión Nacional de los Mercados y la Competencia (CNMC), Mexico's National Antimonopoly Commission, Morocco's Competition Council, the Italian and Spanish investment-screening authorities and the European Commission.

The parties expect completion in the second quarter of 2027 but set a long-stop date of 10 December 2027 for the plan to lapse unless the parties agree an extension. The regulatory timeline is therefore likely to determine when the transaction closes rather than the shareholder votes. The overlap of competition and investment-screening processes includes four antitrust jurisdictions and two investment-screening regimes.

Financial projections, leverage and synergies

The companies forecast approximately €115 million a year of pre-tax cash synergies by the third full year after completion, split into €101 million from operating cost savings and €14 million from financing benefits. Lottomatica projects €200 million to €300 million of incremental online adjusted EBITDA on a run-rate basis by the third year, but the directors' report cautions both estimates could differ significantly from actual results.

At completion the group expects leverage of 2.7x, against a target range of 2.0x–2.5x.

Market reaction, the exit price and strategic context

BDO's valuation ranges show the agreed ratio sits near the top of CIRSA's internal range and in the lower half of Lottomatica's. Lottomatica's board range was 0.518–0.865 Lottomatica shares per CIRSA share; CIRSA's board range was 0.30–0.68. That spread allowed both boards to present the ratio as acceptable to their shareholders.

The €13.20 exit price and LHMC's commitment make the 5% exit condition unlikely to be triggered on current free float levels. Only about 43,289,172 CIRSA shares, roughly 25.8%, are in free float, meaning a substantial proportion of that free float would have to opt out to breach the 5% hurdle.

Regulators now set the critical timeline. The companies describe the commercial overlap between their businesses as limited, while noting CIRSA holds an Italian online licence. For Spanish competitors, including Codere whose sale remains unresolved, the scheduled November votes make a combined group more tangible. For Lottomatica, exposure to developments in the Italian retail concession regime remains a domestic risk. The shareholder approvals are now primarily about turnout rather than persuasion.

For more on regulatory filing requirements see our regulation coverage and for shareholder meeting notices consult the latest news updates.

"BDO Auditores confirmed the fairness of the exchange ratio and the adequacy of the cash exit price," the companies said in their joint release, reflecting the independent expert's role.

Blackstone's LHMC Midco remains irrevocably committed to vote in favour of the merger, the plan states.