The mega-merger deal between Irish-based Flutter Entertainment and Canadian-headquartered The Stars Group /TSG/ has moved one step ahead as the Competition and Markets Authority /CMA/ in the UK has given “unconditional phase one clearance” to the proposed combination.
The owner of Paddy Power Betfair exchange, Flutter Entertainment, and the owner of Sky Bet, The Stars Group, announced in October 2019 that they had agreed to merge operations to create a global gambling market business with annual revenue of £3.8 billion, subject to shareholder and regulatory approvals.
CMA Clears Phase One
Getting the approval by the CMA is considered as overcoming a significant regulatory hurdle as both companies have huge presence in the UK market and the competition authority was expected to strongly scrutinize the combination the two companies would create.
In regards to whether customers who place bets online could be offered less favourable odds, few promotions or poor quality products due to reduced innovation in pricing or app experience stemming from the merger, the CMA found that the level of competition among online betting operators is high enough and the proposed deal would not worsen the offerings for online bettors.
Under phase one, the impact of both company’s assets in the UK has been evaluated, before sanctioning the phase two assessment of the 40% combined share of UK online betting market which is significantly higher than the 25% guidance rule of the regulator.
More Approvals Needed, Shareholders Vote Pending
Besides the CMA, the Competition and Consumer Protection Commission /CCPC/ in the Republic of Ireland and the Australian Competition and Consumer Commission /ACCC/ have to approve the merger deal, with the Foreign Investment Review Board /FIRB/ in Australia needed to signal the green light.
Flutter’s shareholders will also have to give their support for the deal at an extraordinary general meeting on April 21, and three days later, TSG’s shareholders will have to vote for the combination, too.
“This morning’s announcement from the CMA marks a further important milestone in the process towards completion of our proposed combination with The Stars Group. We continue to work with the remaining international regulatory authorities to obtain the last of the outstanding approvals.”Peter Jackson, CEO, Flutter Entertainment
Despite the current economic environment due to the outbreak of the coronavirus /Covid-19/ that caused all major sports in Europe and the USA to grind to a halt, impacting Flutter’s revenue to the extent of £110 million, and even more, the Irish-based gaming company is determined to push forward with its merger deal and has all documents needed for the shareholder meeting being published since last week.
Some of the regulatory bodies that are expected to give the go-ahead for the Flutter-TSG combination have already warned of possible delays due to the limitations imposed by the virus pandemic.