Wednesday August 26,2015 : PADDY POWER AND BETFAIR IN MERGER TALKS
Industry giants move towards consolidation
Paddy Power and Betfair have announced a “possible merger” agreement saying on completion the combined group would be known as Paddy Power Betfair.
The boards of the two industry giants have reached an agreement in principle on the key terms of a merger which would create “one of the world’s largest public online betting and gaming companies by revenue” amounting to over Euro 1.5 billion from their last financial years.
“The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value,” a press statement reads.
Key terms of the proposed deal include:
– Paddy Power shareholders would own 52 percent and Betfair shareholders 48 percent of the issued and to be issued share capital of the Combined Group;
– Immediately prior to completion, Paddy Power shareholders would receive a special dividend of Euro 80 million;
– Gary McGann, Chairman of Paddy Power, would become Chairman of the Board of the Combined Group;
– Breon Corcoran, CEO of Betfair, would become CEO of the Combined Group. Andy McCue, CEO of Paddy Power would become COO and an Executive Director of the Combined Group. Alex Gersh, CFO of Betfair, would become CFO and an Executive Director of the Combined Group;
– The Board of Directors of the Combined Group would also comprise other non-executive directors nominated equally from each of Paddy Power and Betfair.
– The proposed merger would provide greater scale and capability leaving the company better placed to compete in existing and new markets.
– The combined group would undertake a dual brand strategy in Europe utilising the distinctive and complementary brands of Betfair and Paddy Power;
The merger would support a complementary online business and geographic mix from a diversified group with strong platforms across online and retail in the UK and Ireland, and international growth opportunities in Continental Europe, the US and Australia.
Discussions remain ongoing and terms remain conditional on the completion of due diligence, amongst other objectives.
Paddy Power has until 23 September 2015 to announce a firm intention to make an offer for Betfair.