UK betting and gaming company Betfair and Irish bookmaker Paddy Power have announced plans for possible a GBP5bn merger deal that would create one of the world’s largest gambling firms.
It was reported on Wednesday that although the final details of the deal are still to be decided, the companies expect Paddy Power to own 52% of the combined business, while Betfair will own the remaining 48%. It is also anticipated that the combined business would have annual revenues of around GBP1.1bn.
Paddy Power was founded in 1988 with the merger of three Irish bookmakers. It has 350 betting shops and is the third-largest online bookmaker, while Betfair’s betting exchange operates online only. Betfair was founded in 2000 by Edward Wray and Andrew Black who reportedly hold significant shareholding of GBP279m and GBP84m respectively.
According to industry data, the new group would be the UK online market leader with a 16% share, which would mean the group would be better placed to compete in new and existing markets. At current market prices the combined group would be worth GBP5.8bn
Following a merger between the two companies, Betfair’s CEO Breon Corcoran would become chief executive of the combined group, while Paddy Power’s chief executive Andy McCue, would become chief operating officer. Paddy Power’s chairman, Gary McGann, is expected to chair the board of the new company.
Corcoran was cited as saying: “We fundamentally believe this industry is all about scale. By putting together two distinct but phenomenally strong brands, we’ll have a market leading position in the UK, Ireland, Australia and in the United States.”
Paddy Power’s chief financial officer, Cormac McCarthy, stated that the combination was “just a possibility” right now.
“We think this is a very attractive opportunity, the scale and capability is unsurpassed and would leave us in a much better place to compete in our current markets, where competition is intense,” he added.
Financial results were also released by both companies on Wednesday, which revealed that Betfair’s first-quarter revenues increased 15%, while Paddy Power’s operating profit grew 33% to GBP58m, for the first six months of the year, according to the Guardian newspaper. In addition it reported that shares in the companies went higher in early trading following the merger announcement, with Betfair shares up 18% Paddy Power shares up 14%.