News: Paddy Power/Betfair merger to create gaming giant

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Updated: August 28, 2015

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TOWPPBetfairmerger

Paddy Power and Betfair have agreed a deal in principle to merge and form a new company. Should the deal go ahead, both operators said ‘Paddy Power Betfair’ would become one of the world’s largest public online betting and gaming companies. Under the agreement outlined by iGaming Business, Paddy Power shareholders would own 52 per cent of the firm, with Betfair shareholders owning 48 per cent of the issued share capital in the new combined company. Upon completion, Paddy Power shareholders would receive a special dividend of €80 million (USD $92 million).

“The possible merger would create one of the world’s largest public online betting and gaming companies by revenue” – Paddy Power & Betfair statement

Gerry McGann, who last month took over as chairman of Paddy Power, would serve in the same position at the company, with Betfair chief executive Breon Corcoran also taking up the same role. In addition, Paddy Power’s chief executive Andy McCue would become chief operating officer and an executive director, while Betfair chief financial officer Alex Gersh would retain his role and serve as an executive director. Paddy Power Betfair’s board of directors would also include other non-executive directors nominated equally from each of Paddy Power and Betfair.

“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. 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,” the companies stated via a joint statement. The potential merger comes at a time when a number of other major operators are considering similar deals.

Ladbrokes and Gala Coral are expected to complete their proposed merger in the near future, while bwin.party is currently the subject of a bidding war between 888 and GVC Holdings. Confirmation of the potential merger came as Paddy Power and Betfair revealed year-on-year growth in their latest financial results earlier this week. For the six-month period through to June 30, Paddy Power posted net revenue of €527.8 million, an increase of 33 per cent on the €396.5 million recorded in the first half of last year.

Meanwhile, revealing its financial results for the three months through to July 31, Betfair announced that it achieved revenue of £135.4 million, which represents an increase of 15 per cent on the £117.3 million posted in the corresponding period last year. While sports betting remains the company’s main source of income, contributing £89.9 million to the total revenue figure, Betfair’s US business experienced the most growth in the quarter, with revenue from this division up 42 per cent year-on-year to £20.1 million. Betfair’s gaming arm also posted a 27 per cent year-on-year jump in revenue during the first quarter.

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