Flutter Entertainment and the Stars Group to merge

Published by Daniel on October 4, 2019 in Industry News

Flutter and Stars Group MergeThe year is slowly but surely reaching its end but the online casino industry is not slowing down.  

There has been some remarkable partnerships and changes created in the industry throughout the year.  

In most recent events Flutter Entertainment has reached an agreement and acquired the Stars Group.

A merged entity arises 

Flutter Entertainment also known as the parent company of the UK gambling group PaddyPower Betfair, has recently agreed to buy the Canadian online gaming company Start Group. The new merged entity will form the largest online betting operator in the world according to revenue. According to their statistics they would have generated £3.8bn ($4.66m) in revenue for 2018 on a pro forma basis combined.  

According to the new agreement Flutter Entertainment will hold 54.64% of the new company while the Stars Group will be taking a 45.36% stake. Flutter is the owner of popular gaming brands such as FanDuel, Paddy Power and Betfair while Starts Group owns other key industry players such as PokerStars and Sky Betting & Gaming.  

It is clear that both partners are bringing a great deal to the table and that this merger will definitely lead to exciting changes and developments. Unfortunately the deal is also likely to be scrutinised by regulators as the now merged firm holds significant shares in several markets including the UK and US. Combined Flutter Entertainment and the Stars Group is worth around £11bn in market capital. It is therefore expected that not all will be as excited and welcoming about this new merger.  

It has also been made known that Flutter’s current CEO Peter Jackson will be the new organisations CEO and the Stars Group CEO Rafi Ashkenazi will become the COO. The company will continue under the name of Flutter Entertainment. It also expects pre-tax cost synergies of £140m per year by the end of the third year post merger.  

More deal related news 

Another part of the deal enables Fox Bet, part of the Stars Group, to acquire 18.5% of FanDuel while at the same time giving Fastball and Boyd Gaming a 12.5% increase in Fox Bet’s market value under certain conditions.  

Since the news broke regarding the merger, Flutter’s share price rose with about 18% and are currently standing at a solid £89.80.  

What the companies have to say 

According to the Chief Executive of Flutter Entertainment the acquisition or merging with Stars Group has been a long time coming. There was a brief flirtation last year but they only restarted their talks again in the summer.  

With this new deal they will have a much bigger platform to operate from and with a size increase Jackson also believes they will be easily differentiated and no longer considered a commodity player.  

The Stars Group Chair Divyesh Gadhia stated that they are delighted with the new combination of the two and believe it will create significant value for their shareholders. According to Gadhia they’ve been working hard at the Stars Group to stabilise, grow and establish Stars Group as a leader in the industry.  

It is Gadhia’s belief that the next step in the evolution of the business is combining with Flutter and creating a leader in online betting and gaming.