Flutter to complete Stars Group merger on 5 May

30 April 2020

Flutter Entertainment, the operator of the Paddy Power Betfair business, has announced that it will finalise its acquisition of and subsequent merger with The Stars Group (TSG) on 5 May.

Under a deal announced in October of last year, the mega-merger will see Flutter purchase all of the shares in TSG and join together with the operator to create one of the largest operators in the industry, with annual revenue of £3.8bn (€4.3bn/$4.7bn).

Last week, shareholders holding 99.2% of Flutter’s share capital voted in favour of the merger, while TSG shareholders also overwhelmingly backed the deal, with approximately 99.99% of votes cast in support of the proposal.

Flutter confirmed it has also now secured all of the relevant regulatory approvals in order for the deal to go through, with the acquisition set to complete by 8am BST on 5 May.

"I am delighted to confirm that our transformational combination with The Stars Group will complete on 5 May; the enlarged group brings together exceptional brands, products and businesses, a hugely talented and experienced team, and a diverse global presence,” Flutter group chief executive Peter Jackson said.

“The strength of our combined portfolio of assets means that we approach the future with confidence in these uncertain times. 

“Both businesses have a strong legacy of leadership when it comes to responsible gambling. As a combination, we are determined to deliver on our commitment to drive a race to the top when it comes to responsible gambling best practice across the sector.”

Flutter said that when the merger completes, it will continue to employ a federal operating model, where each regional arm of the business has a degree of independence, rather than having strategy determined by group management. This has been  in place across its existing business since January 2018.

According to Flutter, the model leverages its teams’ local knowledge and ensures they have the autonomy to respond to developments in each of their markets, while still having access to the resources that the broader group has to offer.

Upon completion, the combined business will comprise an initial five reporting segments, including TSG International, excluding current US operations; and Sky Betting and Gaming, both from the TSG business.

Other reporting segments will comprise Paddy Power Betfair (Paddy Power online, Betfair, Adjarabet, Paddy Power retail and B2B operations); as well as Australia (Sportsbet and BetEasy); and US (FanDuel Group and all TSG’s US operations including Fox Bet).

Flutter anticipates reporting 2020 full-year earnings on this basis, though in the longer-term, it will move to a four-divisional management and operating structure.

This will involve two steps; the first merging the current TSG International operations with Paddy Power Betfair; and second, once the necessary technical changes have been completed, Paddy Power will move into a new UK & Ireland division along with Sky Betting and Gaming.

Flutter added that each of these organisational changes will be managed with the primary objective of maintaining momentum within each business as the group looks to achieve the potential revenue and cost benefits of integration set out at the time of the original announcement.

“With the overwhelming approval of our shareholders last week and receipt of all remaining regulatory approvals, we look forward to completing our combination with Flutter next week," TSG executive chairman Dave Gadhia said.

“We are very excited about the potential of this combination, which will create a global leader in online betting and gaming with a portfolio of trusted brands, complementary best-in-class products, diversified revenues, stand-out technology and, most importantly, outstanding teams of exceptional people around the world.”