Flutter says £4bn gambling merger will drive growth

Paddy Power owner Flutter Entertainment's plans to create a £4 billion (€4.5 billion) gambling giant with the parent of Poker Stars and Sky Bet will position the Irish group to grow in all its markets, says chief executive Peter Jackson.

Dublin-headquartered Flutter has agreed to merge with Toronto-based The Stars Group (TSG), owner of Poker Stars, Full Tilt and Sky Bet, to form a business with global revenues of £3.8 billion, based on the pair’s financial performance last year.

Speaking after Flutter announced details of the deal, which will need approval from shareholders and regulators, Mr Jackson stressed that it would allow the group to grow in all key markets, Europe, the US and Australia.

As well as adding the poker sites to a stable that already includes Paddy Power and Betfair in Europe, the deal will mean Fox Bet joins Flutter’s Fanduel and TVG in the US.

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Ban

Flutter has targetted the US since a federal court last year lifted a ban on individual states legalising betting on sports such as football, baseball and basketball.

Both Fox Bet and Fanduel have sports betting operations in New Jersey and Pennsylvania, which moved quickly to legalise sports betting, and are laying the groundwork in territories that are expected to follow suit shortly.

“This is not just about America, this about our global business,” said Mr Jackson on Wednesday.

He pointed out that in Australia, the merger would add Easybet to Flutter’s existing business, Sportsbet.

He predicted that this would give the Irish group the scale to take on the TAB, Australia’s former state-owned betting monopoly that remains the country’s biggest player.

Skybet will join Paddy Power and Betfair in the Republic and UK, while the deal will also add businesses that have leading positions in Italy, Germany and Spain.

It will also cut costs by £140 million a year and boost Flutter’s earnings by 50 per cent.

Mr Jackson also pledged that Flutter would remain domiciled and headquartered in the Republic. “That’s not going to change,” he said.

If shareholders and regulators approve the deal, the business will have a primary listing on the London Stock Exchange and a secondary listing on Euronext Dublin, the Irish market.

Backing

Chief financial officer Jonathan Hill said the group expected to seek shareholders’ backing for the merger next March, around the time that will publish its 2019 financial results.

He added that the process of getting competition regulators’ approval would also be under way by the then. “At this stage we are pretty confident that we are going to receive the approvals at the appropriate time,” he said.

If the deal goes through, Mr Jackson will be chief executive of the enlarged business, while the Irish group’s chairman, Gary McGann, will head its board.

Flutter’s shareholders will own 54.64 per cent of the combined business while TSG investors will have 45.36 per cent.

TSG's executive chairman, Divyesh Gadhia, will be deputy chairman while its chief executive, Rafi Ashkenazi, will be its chief operations officer. Flutter's chief financial officer will take that role at the combined group.

TSG’s directors have pledged to vote the 23.79 per cent of the company that they hold in favour of the merger while Flutter’s directors will do the same with the 0.03 per cent that they own.

Mr McGann said that the deal would combine two strong complementary businesses to create a global leader in sports betting and gaming.

Mr Gadhia predicted that the merger would create significant value for TSG shareholders.