After yesterday’s confirmation that Flutter Entertainment would acquire The Stars Group (TSG), the companies’ board members expressed their confidence in gaining the necessary regulatory approvals for the mega-merger to go ahead.
Flutter chief executive Peter Jackson emphasised during a conference call with both investors and industry analysts that he believed there should be no concerns regarding whether the merger would pass competition checks in the UK.
“We’re very respectful of the competition authorities such as the CMA in the UK,” Jackson said. “We look forward to working with them in due course and we are confident that we will receive the relevant approvals in due course.”
The mega-merger is yet to face an examination from the UK’s competition authorities, which often investigate any merger whereby combined UK turnover exceeds £70m (€78.6m/$86.0m) or combined market share exceeds 25%.
According to GamblingCompliance’s estimates for 2018, the combination of these brands controlled circa 25% of the UK online and betting market, with Paddy Power and Betfair worth a combined 12.6%t and Sky Betting & Gaming and PokerStars accounting for 12.4%.
However, when UK sports betting is looked at in isolation, the combined market share shoots up to around 37.5%, with Paddy Power and Betfair contributing 21.4% and Sky Betting & Gaming worth 16.1%.
Jackson also added that there should be no competition concerns in Australia where its Sportsbet.com.au and the Stars Group’s BetEasy currently compete with the Totalisator Agency Board (TAB).
He added: “We are very respectful; we know what we need to do in Australia and will work and engage with them in due course.
“We both run brands in Australia that are trying to take on the might of the TAB, they’re the behemoth in the market and we’re just small corporate bookmakers nipping at their heels.”
Under the terms of the mega-merger, Flutter Shareholders would own approximately 54.64 per cent and TSG Shareholders would own approximately 45.36 per cent of the share capital of the Combined Group.
Jackson explained that they plan to deploy a similar operational strategy to that in place for Paddy Power and Betfair in the UK when it comes to operating multiple brands in the same jurisdiction.
“We’ve had a lot of experience of operating a multi-brand strategy and the way we want to continue to do it in the US is to maintain the purity in terms of customer databases,” Jackson said.
“We have many customers who play daily fantasy sports on FanFuel and we plan to cross-sell those players into sports betting, gaming and horse racing as appropriate, but we don’t try to move players from Paddy Power to Betfair and we won’t try to move players between any of these new brands.”
The mega-merger, according to TSG CEO Rafi Ashkenazi, is primarily focused upon the growth of the two companies. He explained: “This is about driving growth into the business.
“Cost synergies are important but they’re not why we’re doing this deal.”
The approval of Flutter and TSG shareholders is expected to be sought in the second quarter of 2020. Completion is expected to occur during the second or third quarter of 2020 dependent on multi-market regulatory approval.
Upon completion, it is intended that the Combined Group’s Board will comprise of:
- A 14-person Board drawing on expertise and experience of Flutter and TSG
- Gary McGann, currently Chair of Flutter, will assume the role of Chair of the Combined Group
- Divyesh (Dave) Gadhia, currently Executive Chairman of TSG, will assume the role of Deputy Chair of the Combined Group
- Peter Jackson, currently CEO of Flutter, will assume the role of CEO of the Combined Group
- Jonathan Hill, currently CFO of Flutter, will assume the role of CFO of the Combined Group
- Rafi Ashkenazi, currently CEO of TSG, will assume the role of COO of the Combined Group In addition, nine non-executive directors comprising five nominated by Flutter, three nominated by TSG and the appointment of Richard Flint, former CEO of Sky Betting and Gaming.