• Shift to Lottomatica stock heralds substantially shorter exit timetable
• Ideal merger partner derisks valuation amid clear synergy prospects
• High cost of capital incentivises corporates to use liquid paper currency

An announced all-share merger between Blackstone-backed Spanish gaming business CIRSA and its larger Italian peer Lottomatica is a phenomenal result for the former’s private equity owner.

The proposed ratio implies a value of EUR 18.11 per Cirsa share, including a pre-deal close dividend, or a 32.7% premium to CIRSA’s undisturbed share price the day before the announcement.

While on paper Blackstone appears to be getting only a modest premium for its majority stake in CIRSA, it is exchanging its paper in the Spanish firm for something more valuable for a private equity business in 2026: stock it can realistically monetise at scale.

At CIRSA’s mostly primary IPO last year, Blackstone only monetised EUR 53.3m; in its first block trade, the sponsor sold 7m shares to raise EUR 89.25m in proceeds.

Following that disposal, Blackstone still held 126.6m shares. At a similar sell-down size it would take Blackstone 18 further block trades to exit CIRSA.

With at a likely minimum three-month lock-up between each deal, the sponsor could perhaps, at best, hope to execute three a year, implying another six years of shareholding, unless it could dramatically increase deal size, which it wouldn’t be able to do unless it paid a huge concession or the share price rose exponentially.

A further six years of share ownership would represent a total holding period of around 14 years, given Blackstone acquired a majority stake in 2018.

A safer bet

This is what likely makes the Lottomatica deal so appealing for Blackstone.

The 0.668 ratio agreed in the all-share merger means Blackstone’s stake in Lottomatica converts to around 84.6m Lottomatica shares.

The Italian gaming giant was once owned by a peer of Blackstone, US private equity giant Apollo, which listed the business in 2023 and then proceeded to sell-down its positions via block trades.

The last deal from Apollo, in June 2025, was a 53.6m share exit worth EUR 1.2bn, driven by a large reverse order from a long-only investor seeking a sizeable holding in the stock.

Around the same time, Fidelity Management and Research acquired a 9.9% stake in Lottomatica, as tracked by Dealogic institutional holdings data and then later confirmed on Lottomatica’s own website.

Even before the exit trade, Apollo was regularly selling over 20m shares stakes in single block trades. At a similar size, Blackstone could be out of Lottomatica in four blocks; at the size of the final sell-down it would be under two trades.

With the Lottomatica-CIRSA merger expected to close in 2Q27, and Blackstone only locked up for three months after the closure, this represents its best chance to get out of CIRSA fast, short of a rival bidder offering cash.

And given the rising cost of capital, sponsor acquirors will be wary given the share price’s largely sideways progress since the IPO; and corporates are equally keen to keep cash on their balance sheets to strengthen their financials.

The all-share merger also means Blackstone will benefit from any upside alpha from a rising Lottomatica share price. Indeed, who other than Lottomatica can hope to secure the kind of synergies and positioning benefits it outlined in today’s (7 September) investor update?

Lottomatica’s playbook and performance meant Apollo benefited from just that sort of alpha when exiting the Italian-listed business at a 2.7x premium to the value it listed the business at two-and-a-half years earlier.

Consequently, market participants speaking to ECM Pulse were almost universal in their praise for the deal Blackstone has struck, with one senior ECM banker calling it a “massive get out of jail card” for Blackstone and a way to unlock a stuck holding still well underwater from IPO price.

A new option for sponsors

Blackstone has pedigree in accepting shares for its holdings and then selling those shares through the equity capital markets.

The sponsor made billions through selling down its holding in London Stock Exchange, shares it took as part of the exchange’s acquisition of financial data business Refinitiv.

Other sponsors this year have also exercised the option of taking shares in exchange for their portfolio businesses, notably Advent and Cinven in their agreement to sell TK Elevators to Finnish peer Kone.

The logic makes sense. The market for accelerated sell-downs in large, already listed, European stocks has never been better. Investors continue to use accelerated deals for alpha and differentiated performance – but have shown a preference for larger market cap stocks, liquid enough to offset volatility risk in an uncertain world.

Equity valuations are close to record highs, debt is expensive and the private equity industry is still sitting on expensive portfolio businesses bought at the market peak between 2019 and 2021.

At the same time, corporate boards are pushing for scale and industry consolidation to offset against uncertainties presented by AI and geopolitics and helped by a shift in global regulation towards greater accommodation of transformational M&A.

This combination of listed corporates trading on high multiples seeking M&A scale and private equity vendors seeking a way to exit expensive holdings is starting to prove a convenient marriage.

Other possible PE vendors weighing up auctions or IPOs for their unlisted assets, or that face the prospect of a huge number of block trades before an eventual exit, would do well to look around to see whether there are any potential acquirors whose shares they would prefer to hold instead.