The companies said Wednesday that they had agreed an all-share merger to create the world's biggest online betting and gaming company. At Tuesday's closing prices the two companies were worth nearly $12 billion, according to Refinitiv data. The combined group would have about four million active customers in more than 100 international markets, they said in a statement.
In addition to Paddy Power, Flutter owns fantasy sports brand FanDuel and Australia's Sportsbet, among others. The companies say the global gambling market was worth about $450 billion in 2018, with online betting accounting for about 11%. "Flutter and TSG are confident that there remains a long runway of growth left for online and mobile gambling," they added.
The combined group's annual revenue would have been £3.8 billion ($4.7 billion) in 2018. The deal will result in Flutter shareholders owning about 55% of the combined entity, with TSG shareholders owning just over 45%.
Investors gave their immediate approval to the all-share takeover, which is expected to create £140 million (USD 171.8 m) of cost savings per year, sending shares in Flutter up by 20% to £91.96. It will involve a commercial tie-up with the US broadcaster Fox Sports, run by Rupert Murdoch’s son Lachlan, which is already the US betting partner for the Canadian-based TSG.
Fox Sports will gain the right to acquire 18.5% of Flutter’s US fantasy sports business FanDuel at market value from 2021. Flutter bought FanDuel last year as it sought to establish a US after PASPA’s repeal.
Flutter CEO Peter Jackson said the takeover would “turbocharge” the company’s strategy of expansion into new markets while retaining a leading position where it is already well established, in the UK, Ireland and Australia. “We believe the combination of Flutter and TSG will deliver substantial value for shareholders,” he said, as reported by The Guardian. “We will have an exceptional portfolio of leading recreational brands and best-in-class products on industry-leading technology platforms.”
Flutter’s chairman, Gary McGann, said the combined group would also be a “strong voice in the promotion of responsible gambling worldwide”.