Paddy Power owner Flutter set for 'truly transformational' merger deal

Flutter Entertainment plans to merge with The Stars Group, creating a global betting giant.

By Philip Connolly Editor, Fora

FLUTTER ENTERTAINMENT’S PROPOSED acquisition of The Stars Group (TSG) could prove a “truly transformational deal” for both the company and the bookmaking industry.

Analysts at stockbroking firm Davy said they see “strong strategic merit to the transaction” after Paddy Power’s owner announced this morning that it plans to merge with the parent of Poker Stars and Sky Bet, subject to shareholder approval.

Should shareholders approve the deal, the companies would create one of the world’s biggest online betting companies, which would have had combined £3.8 billion revenues in 2018.

“It improves Flutter’s position in key growth markets, including the US, while also bolstering scale and market position in its core (more mature) end-markets,” Davy analysts said in a note.

“Acquisitions of this kind are not without risk (we expect its integration approach to be different to its previous experience). Further, the deal would increase exposure to unregulated markets (Germany, Russia) and poker. However, simply put, it sets Flutter apart as a play on the attractive global gambling opportunity,” they added. 

Shareholders of Flutter would own about 54.64% of the new company, with TSG shareholders owning about 45.36% of it. 

Commenting on the announcement this morning, Peter Jackson, the chief executive of Flutter, said that the combination “represents a great opportunity to deliver a step change in our presence in international markets” and ensures that the company is “ideally positioned to take advantage of the exciting opportunity in the US “. 

“The combination will turbocharge our existing four-pillar strategy,” Jackson said. 

The combined group would be incorporated, headquartered and domiciled in Dublin, with a listing on the London Stock Exchange and a secondary listing on Euronext Dublin.

Two years on from the £7 billion merger of Irish bookmaker Paddy Power and online rival Betfair, in May the company rebranded itself to Flutter. While the business still has hundreds of betting shops spread across Britain and Ireland, most of its growth is focused on generating revenues online. 

More recently the company has been active across the Atlantic where it is hoping to get ahead of rivals in the potentially lucrative US market, where a number of states are going live with legal online sportsbetting. 

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