Paddy Power and Betfair have reached an agreement in principle on the key terms of a possible merger to create Paddy Power Betfair plc.
The firms said that the possible merger would create one of the world’s largest public online betting and gaming companies by revenue with enlarged scale, capability and distinctive and complementary brands. They say the combination has ‘compelling strategic logic’ and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.
As part of the deal, Paddy Power shareholders would own 52 percent and Betfair shareholders would own the rest of the issued and to be issued share capital of the combined group. Immediately prior to completion, Paddy Power shareholders would receive a special dividend of €80 million ($90.6 million).
Breon Corcoran, CEO of Betfair, would become CEO of the merged entity with Paddy Power CEO Andy McCue becoming COO and an executive director. Alex Gersh, CFO of Betfair, would become CFO and an Executive Director of the combined group; while the new Chairman would be Gary McGann, Chairman of Paddy Power.
The structure of the possible merger is being finalized with a view to maximizing benefits to shareholders and other stakeholders, and it is expected that the Combined Group will maintain a significant presence in Ireland and in the UK.
The ‘compelling rationale’ appears to just be scale. The deal would create one of the world’s largest public online betting and gaming companies with revenues of over £1.1 billion ($1.7 billion), which would leave it better placed to compete in existing and new markets.
A dual brand approach will remain, at least in Europe, and the new diversified group would have strong platforms across online and retail in the UK and Ireland, and attractive international growth opportunities in Continental Europe, the US and Australia.