Flutter to buy Stars Group and create global betting giant
Flutter Entertainment, the parent company of Paddy Power Betfair, is to buy the Stars Group, owner of Sky Bet, to create a global betting giant.
In an all-share deal, Flutter shareholders would own approximately 54.64 per cent and Stars Group (TSG) shareholders 45.36 per cent of the new group.
The combined group’s annual revenue would have been £3.8 billion in 2018, making it the largest online betting and gaming operator globally, while it would have approximately four million active customers in more than 100 international markets. The combined group would have a stock market value of around £9.5bn.
It is the latest example of the trend towards greater consolidation in the gambling industry as companies face stricter regulation and higher taxes. The two companies also said it would help give them a stronger position in the burgeoning sports betting market in the United States.
Flutter chief executive Peter Jackson will retain that role in the enlarged group, while Stars Group chief executive Rafi Ashkenazi will become chief operating officer. Flutter chairman Gary McGann will chair the group.
Jackson said: “The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with Fox Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s Fox Bet brands. We are committed to these two high quality brands to drive the growth of the combined group in the US.
“The combination will turbo charge our existing four-pillar strategy and provide world-class capabilities across sports betting, gaming, daily fantasy sports and poker, as well as greater geographical and product diversification.
“We believe the combination of Flutter and TSG will deliver substantial value for shareholders. We will have an exceptional portfolio of leading recreational brands and best-in-class products on industry-leading technology platforms.”
The combined group will be headquartered in Dublin, with a premium listing on the London Stock Exchange and a secondary listing on Euronext Dublin.
The deal will have to be approved by regulatory authorities in the UK, Ireland, Australia, the US and Canada, while the approval of Flutter and TSG shareholders is expected to be sought in the second quarter of 2020.
The two companies added that completion is expected to occur during the second or third quarter of 2020.
McGann said: “This is an exciting and transformational combination that will bring together two strong, complementary businesses to create a global leader in the fast-growing online sports betting and gaming industry.
“Under Peter Jackson’s leadership we will bring together a management team with the experience required to ensure a successful integration of the businesses, with minimal disruption, during a time of unprecedented change in the sector.
“The combined group will be a strong voice in the promotion of responsible gaming worldwide and will lead industry standards on the protection of customers, whilst building sustainable relationships with them.”
The deal will also result in the return of former Sky Bet chief executive and executive chairman Richard Flint as a non-executive director of the new group.
He said he believed it would “create a compelling proposition in global sports betting and gaming”.
The news sent Flutter shares soaring by more than 20 per cent to 9,186p on Wednesday morning and also boosted other firms in the sector, with William Hill shares rising by more than three per cent and GVC Holdings up 0.8 per cent.
Analysts at Dublin stockbrokers Davy said: “Flutter Entertainment’s proposed acquisition of the Stars Group [TSG] represents a truly transformational deal for both the company and the industry. We see strong strategic merit to the transaction.”
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