Paddy Power and Betfair have agreed to a merger that will create one of the world’s largest betting and gaming companies with annual revenues surpassing £1.1 billion (US.73 billion).
The announcement came against the backdrop of a frenzy of consolidation in the online gaming sector highlighted most recently by Ladbrokes’ planned merger with Coral Group and a protracted bidding war now spanning several weeks between 888 Holdings and GVC Holdings to acquire Bwin.party Digital Entertainment.
Paddy Power Betfair, as the new entity will be known, joins a leading global bookmaker with the world’s pre-eminent online betting exchange, both of which have been among the more lucrative investments in the sector, their share prices rising 142 percent and 53 percent, respectively, over the last 12 months. Betfair grew first-quarter revenues by 15 percent against a tough 2014 World Cup comp, while Paddy Power reported a 33 percent increase in first-half operating profit.
The new group will be 52 percent owned by shareholders of Ireland’s Paddy Power and 48 percent by the shareholders of London-based Betfair. Prior to completion of the deal, the details of which are being finalized, Paddy Power shareholders also will receive a special dividend of €80 million ($91.3 million).
Terms of the deal call for Betfair CEO Breon Corcoran, formerly Paddy Power’s chief operating officer, and CFO Alex Gersh to retain their positions in the combined company, with Paddy Power Chairman Gary McGann overseeing a board of directors whose non-executive members will be nominated equally by Paddy Power and Betfair.
