Betfair and Paddy Power set to merge
August 28, 2015
Betfair and its Irish rival Paddy Power announced that they agreed in principle on a 5 billion pound merger to stake a claim to leadership of the online gambling market in Britain in order to create one of the world's largest online betting and gaming groups with revenue of over 1.1 billion pounds, the companies said on Wednesday.
The betting sector has seen a string of deals this year as companies respond to higher tax bills in Britain and tighter regulation by looking to bulk up and better compete in an online market buoyed by the increasing use of mobiles and tablets.
"We fundamentally believe this industry is all about scale," said Betfair Chief Executive and ex-Paddy Power Chief Operating Officer Breon Corcoran, who would lead the new group. "By putting together two distinct but phenomenally strong brands, we’ll have a market leading position in the UK, Ireland, Australia and in the United States," he told Reuters. Under the terms of the agreement, Paddy Power shareholders would own 52 percent of the group with Betfair investors owning the rest. Immediately prior to completion, Paddy Power shareholders would receive a special dividend of 80 million euros. Paddy Power Chairman Gary McGann would keep his role in the combined group, while its CEO Andy McCue would become COO. Betfair finance chief Alex Gersh would also stay put.
Under the proposed merger, Corcoran said both groups will operate side by side in Europe. Paddy Power's portfolio of almost 600 betting shops, more than half of which are in Britain, will also remain part of the plans. Betfair is an exclusively online business, best known for its technology, which allows gamblers to bet against each other. Alongside its core exchange product, the firm is also targeting a larger share of the broader sports betting market.