Paddy Power and Betfair agree merger terms

Paddy Power and Betfair have agreed terms on an all-share merger to create one of the world’s biggest online gambling companies.

This morning’s news follows the announcement late last month that the two companies were in talks to create a combined entity named Paddy Power Betfair with revenues of more than £1.1bn.

In a statement this morning the operators confirmed Paddy Power shareholders will own 52% and Betfair shareholders 48% of the new Paddy Power Betfair entity which will operate a dual-brand strategy throughout Europe.

Breon Corcoran, current Betfair CEO and former Paddy Power COO, has been named CEO and executive director of the merged entity, while Paddy Power CEO Andy McCue will become COO.

“The merger of Paddy Power and Betfair will create a company of world class capability and people who will deliver substantial up-front synergies and a platform for very exciting business expansion,” Gary McGann, Paddy Power chairman, said.

“The combination of Breon, Andy and their colleagues in this merger of equals comprises “the A team” in the business with the ambition to create a unique global player in a very dynamic industry,” he added.

As previously announced, McGann will also become chairman of Paddy Power Betfair and will be joined by Betfair CFO Alex Gersh who will take up the same role at the firm which will have a premium listing on the London Stock Exchange.

“The deal is about two strong players combining to create a powerful international gaming group with significant optionality,” Peel Hunt analyst, Nick Bartram, said.

“Execution risk looks minimal and with relatively little overlap in customers the upside could be greater than many originally anticipated,” he added.

Upon completion of the deal Betfair shareholders will be entitled to 0.4254 new Paddy Power Betfair Shares in exchange for each Betfair share, while Paddy Power shareholders will receive a special dividend of €80m.