Flutter Entertainment and The Stars Group to merge

Andrew Cummings
October 4, 2019

The companies said that the combination is anticipated to deliver "substantial value creation for shareholders from pre-tax cost synergies of £140 million per annum, along with potential revenue cross-sell in global markets and lower finance costs".

The deal is also expected to boost Flutter's underlying earnings per share by at least 50% in the first full financial year following completion.

Peter Jackson, CEO of Flutter, said: "The combination represents a great opportunity to deliver a step-change in our presence in worldwide markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the U.S. through a media relationship with FOX Sports as well as our development of United States sports betting through Flutter's FanDuel and TSG's FOX Bet brands".

Flutter shareholders will only around 54.6% of the new company, while The Stars Group's shareholders will own the rest.

Flutter and Stars - headquartered in Ireland and Canada respectively - racked up a combined $4.7 billion in revenue previous year.


It paid $4.7bn (€4.3bn) a year ago to buy Sky Betting & Gaming. Flutter shares pared an early gain to trade up 8.1 per cent at 8,250 pence as of 2:48 p.m.in London.

The proposed merger gives Fox Sports, which partnered with Stars in May to provide sports betting in the United States, the right to acquire an 18.5% stake in FanDuel in 2021.

The combined group will serve customers in more than 100 countries.

The deal is still subject to shareholder approval as well as approval from the London stock exchange and Euronext Dublin, where Flutter is now listed.

Paddy Power and Betfair owner Flutter Entertainment has agreed a deal to buy Canadian rival The Stars Group to create the world's largest online betting firm with combined annual revenues of £3.8 billion. TSG shareholders will own roughly 45% of the venture.


Flutter CEO Peter Jackson stressed that generating synergies is not the main goal of the deal, which is expected to be completed by the third quarter of next year.

Rafi Ashkenazi, CEO of TSG, added: "This exciting combination will allow us to enhance and accelerate our existing strategy".

The deal collapsed after The Globe and Mail reported that the head of one of Mr. Baazov's financial backers, Dubai-based KBC Aldini Capital Ltd., said he had no knowledge of the deal and that he'd never even heard of Amaya. In recent years, we have transformed TSG from a single product operator in poker to a diverse global leader with multiple product offerings across poker, gaming, and sports betting. "It improves Flutter's position in key growth markets, including the USA, while also bolstering scale" and position in its core markets. Jonathan Hill, now CFO of Flutter, will assume the same role in the combined group, with Flutter's Gary McGann serving as chair and TSG's Divyesh Gadhia as deputy chair.

For the buyer this is "a truly transformational deal for both the company and the industry", Davy analysts Michael Mitchell and Jack O'Halloran said in a research note. It also gives the new company avenues into markets it previously didn't have access to.

Flutter Gaming is better known as Paddy Power Betfair.


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