January 21st, 2016
February will bring a monumental change for the global gambling industry. Multinational gambling operators Betfair and Paddy Power are set to finalise a £5 billion merger and form one of the world’s largest betting companies.
Betfair and Paddy Power first announced their plans to merge in August 2015, revealing that Paddy Power investors would control 52% of the new entity and that Betfair investors would control the remaining 48%. The newly combined operator is expected to start trading on the London and Dublin stock exchanges from 2 February 2016. Meanwhile, Betfair is waiting on British high court approval for its proposed scheme of arrangement – an agreement between Betfair and its shareholders.
The final confirmation came when the Republic of Ireland’s Competition and Consumer Protection Commission (CCPC) approved the merger on Friday 15 January. In a statement, the regulatory body asserted its belief that the merger “will not substantially lessen competition”.
The merger was approved in the UK a month earlier, with the Competition and Markets Authority (CMA) officially closing the case on 29 December, concluding that it “does not believe that the merger gives rise to a realistic prospect of a substantial lessening of competition”. The CMA supported its decision by explaining that “at least three competitors [have] a higher or similar share of supply to the merged entity.”
The two multinational gambling operators have also unveiled their planned management structure. Former Paddy Power COO and current Betfair CEO Breon Corcoran will become CEO of the new entity, with Paddy Power CEO Andy McCue set to take the role of COO.
Both sides have agreed that Betfair Paddy Power will be headquartered in Dublin, and will continue to maintain online betting operations in more than 100 countries, as well as Paddy Power’s 588 betting shops located throughout the UK and Ireland.
The seven-month timeframe of the Betfair-Paddy Power merger is running ahead of the March completion date that was outlined in December. Neither operator has encountered any major hurdles, and any worries about the shareholders' vote on the deal in December were quickly dispelled by a unanimous result.
An overwhelming 99.9% of Betfair shareholders voted in favour of the deal. Just two people voted in opposition of the merger, with a total of 262 in favour. The outcome of the Paddy Power vote was more or less the same, with a 99.9% approval from shareholders, who were also informed that they would receive an €80 million special dividend before the deal is completed.
The successful merging of Betfair and Paddy Power could be followed by another high-profile deal if the Ladbrokes and Gala Coral - owners of all Gala and Coral offerings - merger receives approval this June. Ladbrokes and Gala Coral announced their plans in July last year, but have had a harder time securing their £2.3 billion deal, with Ladbrokes forced to publicly defend the plans after shareholder Dermot Desmond described it as “wrong”.
In spite of the Irish billionaire's claims that the deal will be more favourable for Gala Coral, the proceedings appear to be ticking along – though it remains to be seen whether all parties will reach a happy agreement in 2016.
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