BOOKMAKERS Paddy Power and Betfair unveiled a possible agreed £6 billion merger yesterday that would create one of the world’s biggest online betting and gaming businesses.
The boards have agreed in principle to rebrand the merged businesses as Paddy Power Betfair, which would have revenues topping £1bn.
Paddy Power shareholders would own 52 per cent of the new entity, and Betfair investors 48 per cent. If the deal goes through, Paddy Power investors would also receive a special dividend of €80 million (£59m).
In a stock exchange statement, the companies said: “The possible merger would create one of the world’s largest public online betting and gaming companies by revenue with enlarged scale, capability and distinctive and complementary brands.
“The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.”
Plans for the tie-up between the two firms follow another transformational merger in the bookmaking sector this summer, the proposed £2.3bn tie-up of Ladbrokes with Gala Coral to overtake William Hill as the biggest bookmaker in Britain.
Breon Corcoran, Betfair’s chief executive who is also a former chief operating officer of Paddy Power and who would lead the new group, said: “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 the United States.”
Analysts said the new business would be the market leader online in the UK with a share of 16 per cent, passing a merged Ladbrokes Coral group on 14 per cent, as well as William Hill and Bet365.
Davy Stockbrokers in Dublin said in a note: “The two best quality companies in the European online gaming sector are on the verge of merging.”
Paddy Power was founded in 1988 by the merger of three existing Irish bookmakers and it has become known for its cheeky marketing style.
It has grown rapidly to now have more than 350 betting shops in Ireland and the UK, and is the third-largest online bookmaker and sixth largest online gaming business in Britain and Ireland.
Betfair is an exclusively online business, best known for its technology that allows gamblers to bet against each other.
Both companies also gave trading updates yesterday. Paddy Power said its first-half operating profit had grown by a third to €80m, while Betfair reported a 19 per cent rise in underlying earnings to £41m for the three months to the end of July.