Flutter to complete merger with Stars on May 5

The mega-merger between Flutter Entertainment and The Stars Group is set to be completed next month.

The Paddy Power Betfair operator, Flutter Entertainment, has announced that it will finalise the acquisition and merger of The Stars Group (TSG) on 5 May 2020.

Merger details

Under the deal, which was announced in October 2019, Flutter will purchase all of the shares in TSG and join together to create one of the largest online gambling companies in the world. Once Flutter finalizes its purchase of TSG it will form a combined business with an annual revenue of $4.7bn (£3.8bn).

Last week, both TSG shareholders and Flutter shareholders voted in favour of the mega-merger. Flutter shareholders holding 99.2% of Flutter’s share capital approved the merger, while approximately 99.99% of TSG shareholders backed the deal.

In an announcement made today, Flutter said has secured all of the relevant regulatory approvals to move forward with the deal and aims to complete the deal by 8 am BST on 5 May 2020.

Peter Jackson, Flutter’s group Chief Executive, said: “I am delighted to confirm that our transformational combination with The Stars Group will complete on 5 May. The enlarged Group brings together exceptional brands, products and businesses, a hugely talented and experienced team, and a diverse global presence. The strength of our combined portfolio of assets means that we approach the future with confidence in these uncertain times.

“Both businesses have a strong legacy of leadership when it comes to responsible gambling. As a combination, we are determined to deliver on our commitment to drive a race to the top when it comes to responsible gambling best practice across the sector.

“As we approach a new era for the enlarged Flutter organisation, I wish to take this opportunity to acknowledge the huge contribution of Rafi Ashkenazi in creating the exceptional business that The Stars Group is today. He has been instrumental in transforming TSG from a single product operator to a diverse global leader with multiple product offerings. I know that his experience and expertise will bring valuable perspective to our Board as we bring our two businesses together.”

New organizational design

In the announcement, Flutter said that once the merger is complete, it will continue to employ a federal operating model where each regional arm of the company will have a level of independence instead of having a strategy determined by the group’s management.

Flutter said that the model leverages each teams’ local knowledge and will ensure they have the autonomy to respond to developments in each of their markets while at the same time having access to the broader group’s resources.

The combined business will consist of an initial five reporting segments which include:

  • TSG International (this will exclude US operations)
  • Paddy Power Betfair (this will include Paddy Power online, Betfair, Adjarabet, Paddy Power retail and B2B operations)
  • Sky Betting and Gaming
  • Australia (includes Sportsbet and BetEasy)
  • US (this will include FanDuel Group and TSG US operations)

Flutter expects to report its 2020 full-year financial results on this basis but plans to move to a four-divisional management and operational structure in the future.

This will involve merging the current TSG International operations with Paddy Power Betfair and then once the necessary technical changes have been made, Paddy Power will move into a new division focusing on the UK and Ireland along with Sky Betting and Gaming.

Flutter went on to say that each of these organisational changes will be managed with the objective of maintaining momentum within each of the group’s businesses.

Dave Gadhia, Executive Chairman of the TSG Board said: “With the overwhelming approval of our shareholders last week and receipt of all remaining regulatory approvals, we look forward to completing our combination with Flutter next week. We are very excited about the potential of this combination, which will create a global leader in online betting and gaming with a portfolio of trusted brands, complementary best-in-class products, diversified revenues, stand-out technology and, most importantly, outstanding teams of exceptional people around the world”

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