Betfair and Paddy Power reveal merger talks
Operators reveal talks are ongoing to create a new dual-brand combined entity with revenues of more than £1.1bn
Betfair and Paddy Power are in talks over a potential mega-merger which would create a new online gambling giant with combined revenues of more than £1.1bn.
Under the terms of the deal, Paddy Power shareholders would own 52% and Betfair shareholders 48% of the new combined entity which would maintain a dual-brand strategy throughout Europe.
The two operators announced this morning the new structure is still being finalised but if completed would see Betfair’s current CEO Breon Corcoran become CEO of the group, while Paddy Power CEO Andy McCue would become COO and executive director.
Corcoran, who was previously COO of Paddy Power before joining Betfair in 2012, described the proposed merger with Paddy Power as being “hugely exciting”.
“It would create a truly global sports betting group with unmatched products and talent, and significantly enhanced scale,” Corcoran said.
“The combined business would be one of the world’s largest online sports betting operators, with revenues totalling more than £1 billion,” he added.
Further announcements are expected by the two operators in the coming weeks.
Paddy Power currently has a market capitalisation of 3.98bn (£2.92bn), compared to £2.86bn for Betfair which has seen its share price increase from 1762p to 2603p this year. Paddy Power’s share price was today up 14.59% at the time of writing to 90 on the Irish Stock Exchange.
Analysts Peel Hunt described the proposed merger as “compelling”. “This merger is about two of the gaming industry’s strongest players, with a familiar philosophy, getting together to create something of even greater scale and depth.
“In terms of execution risk, this looks pretty small given Breon’s long and successful tenure at Paddy Power,” it said.
Patrick Coffey at Barclays said the combined group could increase efficiency of spend on product and marketing in order to improve returns.
“In our view, there is the potential for the combined group to introduce an Omni-channel product in the future (e.g. Betfair customers could withdraw deposits from Paddy Power shops),” he said in a note.
“Additionally, the combined entity will share best practice in areas which are crucial to growth in this sector (product, promotion, price, CRM). This combination is likely to attract talent from the industry too.”
Today’s news comes after UK gambling giants Ladbrokes and Gala Coral recently agreed terms on a transformational merger between the two companies which will have annual digital revenues of approximately £400m and a market cap of £2.3bn.
GVC Holdings and 888 are also fighting it out to acquire beleaguered operator bwin.party, with the two bidders currently offering approximately £900m and £1.1bn respectively.