Irish bookmaker Paddy Power has agreed the terms of its proposed merger with UK gaming company Betfair, paving the way for the creation of one of the world's largest public online betting and gaming companies with revenues of more than €1.5bn.
Paddy Power shareholders will take a 52 per cent in Paddy Power Betfair, as the new company will be known, and will also receive a special dividend of € 80 million, which will be paid out on the business day prior to completion of the merger.
Betfair shareholders will take a 48 per cent stake, and will be entitled to receive 0.4254 new Paddy Power Betfair Shares in exchange for each Betfair share.
Paddy Power Betfair will be headquartered in Dublin and is expected to maintain a significant presence in both Ireland and the UK. It will have a premium listing on the London Stock Exchange and a secondary listing on the Irish Stock Exchange as an overseas company.
Betfair CEO Breon Corcoran, a former Paddy Power executive, will lead the new enlarged business, with Andy McCue, current CEO of Paddy Power, moving into the position of chief operating officer. Gary McGann, chairman of Paddy Power, will become the chairman of Paddy Power Betfair; Alex Gersh, CFO of Betfair, will become CFO of Paddy Power Betfair; and Paddy Power Betfair's board will include non-executive directors nominated equally from each of Paddy Power and Betfair.
Gary McGann, chairman of Paddy Power said: “The merger of Paddy Power and Betfair will create a company of world class capability and people who will deliver substantial up-front synergies and a platform for very exciting business expansion. The combination of Breon, Andy and their colleagues in this merger of equals comprises “the A team” in the business with the ambition to create a unique global player in a very dynamic industry.”
The companies said that the deal offers “ compelling strategic logic” and represents an attractive opportunity for both Paddy Power and Betfair “to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value”.
Paddy Power Betfair expects to achieve recurring annual pre-tax cost synergies of approximately £50 million.
The merger is expected to close during the first quarter of 2016.
