Gambling operators Paddy Power and Betfair announced earlier today that they have agreed on the terms of their proposed merger. The new company will be called Paddy Power Betfair and will be headquartered in Dublin. Betfair CЕО Breon Corcoran (who formerly took the position of COO of Paddy Power) will assume the same post in the combined business entity.
Valued at about £5 billion, the new gambling operator is to turn into a leader in the market for the provision of various online gambling options in the UK. The new group’s market share will be 16%. In comparison, the recently announced merger between rivals Ladbrokes and Gala Coral will hold a 14% market share.
Under the terms of the deal, Paddy Power would purchase Betfair for the amount of £2.87 billion. Thus, the biggest publicly traded gambling company will be created. Paddy Power shareholders will hold a 52% stake in the combined group and Betfair ones will own the rest. Here it is important to note that the transaction is subject to shareholders approval.
Once the deal is completed, Betfair investors will be granted 0.4254 shares in Paddy Power Betfair for each share they own in Betfair. Current Paddy Power shareholders will be granted a dividend totaling €80 million.
The two gambling operators have previously pointed out that their combined operations are expected to generate annual revenue of more than £1.1 billion. What is more, according to initial estimates, pre-tax cost savings are believed to reach £50 million annually.
The companies also said earlier today that they will operate together across Europe and will run Paddy Power’s betting shops. Currently, the company has 600 of those, more than half of which are located across Great Britain.
Paddy Power and Betfair announced that there had been ongoing discussions about a possible merger on August 26. The amalgamation between the two entities is only one of series of similar combinations between some of Europe’s largest gambling operators.
Last week, GVC Holdings announced that it would buy rival gaming company bwin.party for £1.12 billion. In July, rivals Ladbrokes and Gala Coral also confirmed their merger. Gambling experts attributed this combination of major gaming groups to the recently introduced taxation and regulatory changes in the UK and Europe in general. Those seem to be driving operators to look for efficiencies through mergers with their competitors.
Being backed by shareholders of the both gambling companies, analysts believe that the transaction will be completed as soon as possible.
