Flutter Entertainment Merges with The Stars Group

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Flutter Entertainment
  • Flutter Entertainment buys out The Star Group to create a new global gaming giant
  • TSG will hold 45.36% of the stock in the new company
  • Fox Bet’s FanDuel and Fastball will sell their shares in the company

The Stars Group and Flutter Entertainment have announced their merger, creating the world’s largest gaming company.

Flutter Entertainment and TSG Reveal Merger

Flutter Entertainment, one of the heavyweights in the iGaming, sports betting, and poker segments, has announced the acquisition of The Stars Group (TSG), the parent company of the world’s largest card room, PokerStars. With an annual revenue of $4.7 billion, the acquisition of TSG is one of the most significant steps towards consolidation of the online gaming sector.

Flutter already owns Paddy Power Betfair which emerged as a result of a merger between Paddy Power and Betfair. The latest move creates the world’s newest global behemoth in the gaming space. As part of the deal, Flutter Entertainment will exchange 0.2253 new shares for a single TSG share.

When shares are finalized, present Flutter shareholders will control 54.64% of the stock, with the remaining 45.36% going back in the way of TSG shareholders. The implications are big for online gaming, but they are equally beneficial from a financial standpoint.

According to the companies, the merger would lead to pre-tax cost synergies estimated at $171 million. Furthermore, the merger could lead to potential big cost synergies in post-tax returns. Speaking of operations, TSG and Flutter will have a diverse clout in the world of gaming, featuring various segments, such as:

  • Poker
  • Casino
  • Sports betting
  • F2P games
  • Daily Fantasy Sports

Flutter also added that it expects to see bigger profitable growth, boost international markets, and expand into new countries that are only now debating the future of their gaming industries. Such markets include Spain, Italy and Germany, while the United States continues to be undergoing a series of favourable changes as well.

What Do Executives Think?

According to Flutter CEO Peter Jackson the opportunity presented by the merger creates a chance for the company to consolidate its footstep in existing markets. Jackson similarly mentioned the deal between TSG and Fox Sports, which allows Flutter to continue expanding across the country:

“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.”

Jackson will remain the CEO in the newly-emerging gaming giant and preside over a board of 14 people. TSG CEO Rafi Ashkenazi would take up a new responsibility as COO. Here’s what Ashkenazi had to say on the occasion:

“This exciting combination will allow us to enhance and accelerate our existing strategy. In recent years, we have transformed TSG from a single product operator in poker, to a diverse global leader with multiple product offerings across poker, gaming and sports betting.”

A Few Details to Wrinkle Out

Before the merger can be concluded, there will be still a few things to arrange. For starters, the move is not likely to be complete until Q2 2020. TSG shareholders will also have to make a vote, with the necessary number of in-favor votes needing to reach 66%.

At the same time, the London Stock Exchange, the FCA, and Euronext Dublin will all need to review and assess the deal before the companies can merge. A further reassessment of the deal would need to be done by Fox Sports, which created the Fox Bet sportsbook with TSG.

Commenting on the development, Fox Corporation CEO Lachlan Murdoch had this to say: “Our Fox Bet partnership is off to a great start, and teaming up with Flutter and FanDuel will allow us to build on that strength and jointly capture the significant market potential ahead of us. We’re excited to be able to expand our partnership into FanDuel, which together with FOX Bet, will be a leader in sports wagering in the US.”

FanDuel and Fastball also hold shares in Fox Bet, but they have agreed to sell them, simplifying the merger procedures for both Flutter Entertainment and The Stars Group (TSG).

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