Betfair and Paddy Power take a ₤ 5bn merger punt

26 August 2015

Betfair and Paddy Power are set to combine in a ₤ 5bn deal that would produce one of the world's biggest online wagering and gaming business.

Final information are still being worked out, but the companies said the offer had "compelling strategic logic" and enhanced their market position.

Paddy Power shareholders would own 52% of the combined business, with Betfair financiers owning the staying 48%.

The combined business would have annual profits of some ₤ 1.1 bn.

"Discussions stay continuous regarding the other terms of the possible merger," a statement said on Wednesday, external.

The new group would be the UK online market leader with a 16% share, according to market information, passing a merged Ladbrokes/Coral on 14%, along with William Hill and the independently owned Bet365.

Shares in Betfair soared 17% to ₤ 30.60 on Wednesday, while Paddy Power jumped more than 18% in Dublin.

If the offer goes on, Breon Corcoran, boss of Betfair, would end up being president of the combined group, while his counterpart at Paddy Power, Andy McCue, would become chief running officer.

'Everything about scale'

The combined company prepares to maintain the "distinct and complementary" Betfair and Paddy Power brands in Europe.

Mr Corcoran said: "We basically believe this promotion code industry is everything about scale. By assembling two distinct but phenomenally strong brands, we'll have a market leading position in the UK, Ireland, Australia and in the United States."

Cormac McCarthy, Paddy Power's primary monetary officer, said the mix was an "attractive opportunity".

"The scale and capability is unparalleled and would leave us in a far better location to complete in our current markets, where competitors is intense," he said.

Given the complementary nature of the 2 business, he was confident that any competition issues could be overcome.

Paddy Power was established in 1988, when three Irish bookmakers combined. It has 350 betting shops and is the third-largest online bookie.

Betfair, in contrast, is offering a marketplace - or wagering exchange - that lets clients bypass the requirement for a conventional bookie.

Based upon their closing costs on Tuesday, Betfair was worth ₤ 2.4 bn and Dublin-listed Paddy Power deserved EUR3.4 bn (₤ 2.5 bn).

Industry mergers

Shareholders in Paddy Power would receive a special dividend of EUR80m.

There has been a flurry of merger activity in the yohaig code betting sector in recent months.

In July, online betting company 888 Holdings won a takeover fight for rival Bwin.party in a cash-and-stock offer valued at about ₤ 898m.

The 2 companies had been in conversations given that the middle of May.

Ladbrokes and Gala Coral also recently sealed a ₤ 2.3 bn merger.

Online gambling firm 888 purchases Bwin

17 July 2015

CVC shelves Betfair takeover bid

14 May 2013