Paddy Power, Betfair agree on details of merger

Online gaming consolidation is gathering pace. After last week’s recommendation by for a $1.7 billion acquisition offer from GVC Holdings, today brings another piece of news on the M&A front.

Paddy Power plc and Betfair Group Ltd (LON:BET) today announced they have agreed on the details of a planned merger. The deal, which was initially unveiled in the end of August, will see the creation of a new combined entity, named Paddy Power Betfair plc, expected to achieve recurring annual pre-tax cost synergies of approximately £50 million.

Under the terms of the deal:

  • Betfair Shareholders will be entitled to receive 0.4254 New Paddy Power Betfair Shares in exchange for each Betfair Share.
  • The Merger will result in Paddy Power Shareholders owning 52% of Paddy Power Betfair and Betfair Shareholders owning 48% of Paddy Power Betfair on a fully diluted basis.
  • Before the completion of the merger, Paddy Power Shareholders will receive a special dividend of €80 million.

New company management:

  • Gary McGann, Chairman of Paddy Power, will become the Chairman of Paddy Power Betfair;
  • Breon Corcoran, CEO of Betfair, will become CEO and an Executive Director of Paddy Power Betfair;
  • Andy McCue, CEO of Paddy Power, will become COO and an Executive Director of Paddy Power Betfair;
  • Alex Gersh, CFO of Betfair, will become CFO and an Executive Director of Paddy Power Betfair.

Paddy Power Betfair will have its headquarters in Dublin and is expected to maintain a significant presence in both Ireland and the United Kingdom. It will have a premium listing on the London Stock Exchange and a secondary listing on the Irish Stock Exchange as an overseas company.

It is expected that the Merger will be completed during the first quarter of 2016, pending regulatory approvals and consent by Paddy Power’s shareholders. The Boards of directors of both companies are recommending the offer.

Commenting on the Merger, Gerald Corbett, Chairman of Betfair said:

“The merger of Paddy Power and Betfair will create one of the world’s largest public online betting and gaming companies. The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands. Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.”

To view the official filing with the LSE, click here.

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