The online gambling industry is due to experience its largest merger ever after news broke yesterday that Paddy Power and Betfair are planning to join forces.
The merger deal, worth a potential 7.5 billion, could be finalized in 2016 if shareholders in both companies give the green light.
Share prices of both companies shot up on the Dublin and London stock markets where Paddy Power and Betfair are listed respectively.
The venture has been described as a "merger of equals" by Paddy Power chief executive Andy McCue, with net revenues of 1.5 billion being generated last year by both.
Negotiations have only been going on for a fortnight, and the result was an announcement yesterday that plans are in the making to create Paddy Power Betfair plc.
Details About Paddy Power-Betfair Merger
These are the details that we know about the new Paddy Power - Betfair merger. They can, of course, change as the companies move towards the finalization of the deal.
- The merged company will be listed on the London and Dublin stock exchanges.
- The merger could be completed by early next year.
- There are no competition hurdles to overcome.
- Both brands will be retained.
- Paddy Power shareholders will own 52% of the merged entity, while Betfair will own the rest.
- Paddy Power shareholders will receive a special 80 million dividend before the transaction closes.
- Breon Corcoran, current CE of Betfair, but who acted as the CEO of Paddy Power in the past, will run the new Paddy Power Betfair Plc.
- Gary McGann will be chairman of the new group.
Merger from Position of Strength
Paddy Power said that the merger between the two groups was being created from a position of strength, and not in order to overcome any problems being experienced in the industry.
Andy McCue said that the deal "accelerates our strategy."
"We have a very good organic strategy," he said. "Betfair have good momentum in their business. The combination of the companies becomes even more attractive and both are coming from a position of strength."
"It's a rare opportunity for a merger equals, of two leading players in a sector."