Betfair and Paddy Power share prices soar on mega-merger news

Betfair and Paddy Power share prices soar on mega-merger news

Wednesday, August 26, 2015 Totally Gaming
Industry consolidation continues with game-changing deal

The share prices of Betfair and Paddy Power rocketed today (Wednesday) after the two companies announced a deal to merge and form the world’s largest online gambling company.

Under the terms of the all-stock merger, Paddy Power would own 52 per cent of the group, with Betfair shareholders controlling the remaining 48 per cent. Paddy Power shareholders would receive a special dividend of €80m ($92m) immediately prior to completion.

Betfair’s share price rose by 20.4 per cent on the news, with Paddy Power’s spiking by 18.5 per cent.

The key terms of the deal have been agreed, although not finalised, but the merged company would have a market capitalisation of more than £5bn.

The combined company would generate annual revenues of more than £1.1bn and would have an online market share of 16 per cent in the UK – above the 14 per cent of a merged Ladbrokes-Coral group as well as William Hill and Bet365.

With the deal representing the latest example of consolidation in the industry, Betfair CEO and ex-Paddy Power chief operating officer Breon Corcoran told the Reuters news agency: “We fundamentally believe this industry is all about scale.

“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.”

Corcoran would lead the merged group, which is expected to be called Paddy Power Betfair Plc, with Paddy Power chairman Gary McGann retaining his role in the combined company.

Davy Stockbrokers described the deal as bringing together “the two best quality companies in the European online gaming sector”.

Cormac McCarthy, Paddy Power’s chief financial officer, told the Financial Times: “Betfair is the leading exchange business in sports betting and that technology is something Paddy Power does not have.

“We have a retail and mass market business and we have an Australian business that they do not have. If you look at the strategic rationale, synergies are not the first thing.”

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