Flutter Entertainment and The Stars Group agree merger

Flutter Entertainment has shaken up the online gambling space after announcing plans to purchase The Stars Group.

On Wednesday morning, Flutter Entertainment, the owner of FanDuel and Paddy Power Betfair, announced that it has agreed on a deal to acquire all of the shares in The Stars Group (TSG) and merge with TSG.

The Stars Group owns PokerStars, Sky Bet and is involved in a joint venture with Fox Sports for the Fox Bet platform in the US.

Once Flutter finalizes its purchase of TSG it will form a combined business with an annual revenue of $4.7bn, making it the largest online gambling company on the planet.

What’s covered in the deal?

Under the deal, Flutter will exchange 0.2253 new shares in exchange for each share of TSG. Flutter shareholders will own about 54.64% of shares in the new combined business while TSG shareholders will hold the remaining shares. The merged company will continue to operate under the Flutter Entertainment name.

The companies hope to deliver substantial value creation for shareholders from pre-tax cost synergies of £140 million per annum and potential revenue cross-sell in international markets and lower finance costs.

Peter Jackson, CEO of Flutter said: “The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with FOX Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s FOX Bet brands. We are committed to these two high quality brands to drive the growth of the Combined Group in the US.”

As part of the deal, Fox Bet will have the right to acquire 18.5% of FanDuel. At the same time, Boyd Gaming and Fastball will receive 12.5% of the increase in Fox Bet’s market value under certain conditions.

Rafi Ashkenazi, CEO of TSG said: “This exciting combination will allow us to enhance and accelerate our existing strategy. In recent years, we have transformed TSG from a single product operator in poker, to a diverse global leader with multiple product offerings across poker, gaming and sports betting. The combination with Flutter will further enhance our company’s core strengths, and position us strongly for the future in this rapidly evolving industry.”

What does this mean for the US space?

The merging of Flutter and TSG creates a sports betting giant that would dominate new and emerging US sports betting markets.

FanDuel Sportsbook has emerged as the market leader in the New Jersey and Pennsylvania sports betting markets, the two biggest sports betting markets outside of Nevada.

Both TSG and Flutter operate in 100 different countries, meaning that once the merger is complete, the new business will become the largest online gambling company on the face of the earth.

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