Flutter Entertainment Merger With The Stars Group

Two online gambling giants, Flutter and The Stars Group, have announced their plans to join forces, creating the world’s largest online gambling operator.

In a press release, Flutter Entertainment, previously known as Paddy Power Betfair, announced it is acquiring The Stars Group in an all-share deal. The result will be an online gaming behemoth called the Combined Group with a valuation in excess of $12 billion and annual revenue of about $4.6 billion.

The deal brings together some of the most recognizable and iconic brands in gaming together under the same umbrella and underscores the consolidation trend in the global online gambling marketplace.

Here’s what we know about the deal.

TSG-Flutter Deal by the Numbers

The all-share deal entitles shareholders of The Stars Group to receive 0.2253 of new Flutter shares in exchange for each share they own.

Once the merger is complete, shareholders of Flutter will hold about 54.6% of the new company, while The Stars Group shareholders will have the remaining 45.4%.

Heading into the deal, Dublin-based Flutter laid claim to six million active users. The Stars Group brings seven million active users to the table, which will leave the Combined Group with a total base of 13 million customers from the get-go.

In an investor presentation announcing the deal, Flutter pointed to the advancement of its existing four-pillar strategy:

• Maximize profitable growth in core markets.
• Grow our business in the rest of the world.
• Attain additional podium positions.
• Pursue US opportunity rigorously.

For Flutter, core sports betting markets are the UK, Ireland, and Australia. The deal expands the company’s foothold there, and also provides access to new European markets in Germany, Italy, and Spain.

In the US, the deal brings together FanDuel and FOX Bet, two of the most recognizable brands in the burgeoning sports betting market.

The numbers for the deal and the end result of a massive online global betting giant are eye-popping, as is the fact that Flutter is paying a premium to execute the deal.

So why would they do that?

One of the reasons, according to Flutter Chief Executive Peter Jackson, the Combined Group can achieve cost savings of $171 million annually.

Numerous Recognizable Brands Under the Same Roof

The Combined Group will have quite the roster of brands.

Here are the biggest pieces of the Flutter portfolio:

• PaddyPower
• BetFair
• FanDuel
• SkyBet
• TVG
• Adjarabet

That’s several massive casino and sports betting platforms, a leading daily fantasy sports brand, and one of the most recognizable names in the US horse racing market.

The Stars Group brings a lot to the table too, including the missing piece of the Flutter puzzle, online poker:

• PokerStars
• SkyBet
• Sky Vegas
• FOX Bet
• Bet Easy

The hope is the combined group will increase its reach and cross-selling opportunities throughout its various platforms.

Combined Leadership Group Sees Great Things Ahead

Not surprisingly, executives at both companies were enthusiastic about the deal.

In the announcement, Gary McCann, Chair of Flutter, noted that the deal signifies the creation of a global leader in online gaming.

This is an exciting and transformational combination that will bring together two strong, complementary businesses to create a global leader in the fast-growing online sports betting and gaming industry.

Under Peter Jackson’s leadership we will bring together a management team with the experience required to ensure a successful integration of the businesses, with minimal disruption, during a time of unprecedented change in the sector.

The Combined Group will be a strong voice in the promotion of responsible gaming worldwide and will lead industry standards on the protection of customers, whilst building sustainable relationships with them.

Divyesh Gadhia, Executive Chairman of TSG, echoed similar sentiments.

The Board of TSG and I are delighted to recommend this exciting combination of TSG and Flutter, which we believe will create significant value for TSG’s shareholders.Over the past four years our team, led by Rafi, has been working relentlessly and passionately to stabilise, grow and establish TSG as one of the clear leaders in our industry.

We seized new opportunities in poker, significantly grew our casino business, acquired one of the U.K.’s most notable sportsbook brands in Sky Bet, built a significant presence in Australia through BetEasy, and teamed up with FOX Sports to launch FOX Bet to position ourselves to become a leader in the U.S.

We have long had respect for Flutter, and believe the combination is a natural next step in the evolution of the business, creating a leader in online betting and gaming with trusted brands, diversified revenues, stand-out technology and the best operational and managerial talent in the industry.

With TSG appointing a significant portion of the new Board, we look forward to working together with Gary, Peter and the Flutter team to continue and contribute to the success of our combined business.