Betfair and Paddy Power have agreed in principle on a £5bn merger to stake a claim to leadership of the online gambling market in Britain. If an AUD10 million merger deal goes through, Betfair and Paddy Powers could become the biggest combined gambling group.
Irish and the UK betting giants look likely to close an audacious merger in what is turning out to be a year for audacious gambling mergers.
On Wednesday, it was revealed in a statement that the combined company which will be called Paddy Power Belfair. Betfair will give investors 48% and 52% of the combined business shares to Paddy Power shareholders. Paddy Power has until 23rd September to finalise any deal if the deal goes ahead.
Current CEO of Betfair Breon Corcoran will become the new CEO of the entire combined group, while chairman of Paddy Power Gary McCann becomes Chairman of the Board of the new business enterprise.
On Wednesday shares in Betfair went up by 17% to £30.60, while Paddy Power rose by more than 18% in Dublin. The distinctive and complementary Betfair and Paddy Power brands in Europe will be retained by the combined group. In a statement, Chief Financial Officer of Paddy Powers, Cormac McCarthy, said that the combination was an appealing opportunity.
When three Irish bookmakers merged in 1988, Paddy Power was founded. Now it is the third-largest online bookmarker with 350 betting shops. Based on their closing prices, Betfair was worth £2.4bn and Dublin-listed Paddy Power was worth €3.4bn which is equivalent to £2.5bn.
This year in July, online gambling company 888 Holdings won a takeover of bwin.party. 888 Holdings’ deal is expected to complete early next year.