Flutter Entertainment to Buy The Stars Group
The online gambling world is about to change in a major way. Early Wednesday morning, news broke that Flutter Entertainment has agreed to acquire The Stars Group. According to Bloomberg, the deal is worth about $6 billion and will be an all-share transaction.
The merger of the two companies will create the largest online gambling company in the world. Flutter Entertainment operates Paddy Power, FanDuel, and Betfair while The Stars Group operates PokerStars, Fox Bet, and Sky Gaming.
Flutter Entertainment Buys The Stars Group
Multiple news sources broke the news early Wednesday morning that The Stars Group will be purchased by Flutter Entertainment. The all-stock deal will be worth approximately $6 billion upon completion.
After the completion of the merger, Flutter Entertainment shareholders will own around 54.64 percent of the combined company. Shareholders for The Stars Group would hold around 45.36 percent of the equity of the combined company.
Organizational structure for the combined group will use members of both companies but key roles will primarily be held by Flutter Executives. Flutter Chairman of the Board Gary McGann will become the Chair of the new group. Flutter CEO Peter Jackson will become CEO of the new group. Flutter CFO Jonathan Hill will become the CFO of the new group.
PokerStars CEO Rafi Ashkenazi will remain with the combined group and take over as the new group COO. The new group Board will comprise of 14 members, combining members of both groups.
The deal still requires the approval of both Flutter and The Stars Group shareholders. Shareholders will be able to vote on the deal during the second quarter of 2020. Completion of the merger is expected by the end of Q3 2020.
New Company Will Focus on United States Market
This merger can be seen as anticipatory as the combined group’s focus will be on the growing online gambling market in the United States. After the Supreme Court overturned the ban on Sports Betting, the legal sports betting market exploded.
Flutter Entertainment operates FanDuel in the United States while The Stars Group offers Fox Bet in New Jersey. The Stars Group also operates PokerStars in New Jersey and will soon begin operations in Pennsylvania.
According to Flutter CEO Peter Jackson, “The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with FOX Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s FOX Bet brands. We are committed to these two high quality brands to drive the growth of the Combined Group in the US.
The combination will turbocharge our existing four-pillar strategy and provide world-class capabilities across sports betting, gaming, daily fantasy sports and poker, as well as greater geographical and product diversification. We believe the combination of Flutter and TSG will deliver substantial value for shareholders. We will have an exceptional portfolio of leading recreational brands and best-in-class products on industry-leading technology platforms.”
Combined Group Will Form World’s Largest Gambling Group
The combination of Flutter and The Stars Group will form the world’s largest online gambling company. After the merger, the new group will have over 13 million active gamblers in over 100 countries worldwide.
Factor in the expected expansion of online casino gambling, online poker, and online sports betting in the United States, and that number will start to climb towards 20 million over the next decade. Combined revenues for both companies are around $4.7 billion in 2018.
This can be looked at as both good and bad depending on how you view the merger. It will provide long-term stability for the combined group and put it in a better position to take advantage of global online gambling expansion.
However, those that do not like mega-conglomerates will not like this deal. PokerStars was long seen as a virtual monopoly for online poker and the combination of The Stars Group and Flutter Entertainment will not be viewed positively by that crowd.
So far, the big winners have been shareholders who have seen gains of over 20% for both stocks following the news.