In the latest move to consolidate the gaming industry, bookmakers Betfair and Paddy Power have unveiled their plans to merge, creating one of the world's biggest online betting and gaming companies.
On Wednesday (August 26th), the two companies said that the deal had "compelling strategic logic" and boosted their market position. However, final details are still being worked out.
According to information released, Paddy Power shareholders will own 52 per cent of the combined business, while investors in Betfiar will own the remaining 48 per cent. The combined business is expected to see annual revenues of £1.1 billion.
Shareholders in Paddy Power will receive a special dividend of €80 million (£58 million).
The companies also say that they will retain the individual brands in the UK and Europe, saying that they are "distinctive and complementary".
Following news of the merger, shares in Betfair went up 18 per cent to £30.72. Paddy Power shares also jumped more than 15 per cent in Dublin.
Breon Corcoran, the current boss of Betfair is set to become chief executive of the combined group. His counterpart at Paddy Power, Andy McCue, will become chief operating officer. Gary McGann, chairman of Paddy Power, is expected to become chairman.
"The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value," the companies said in a statement.
Other industry mergers
The deal between Betfair and Paddy Power isn't the only merger in process in the betting industry.
According to the Guardian, there has been a "flurry of dealmaking" in the sector after new taxes have been imposed on online gambling around the world. Companies in the sector also need to invest heavily in marketing and technology to remain competitive.
Earlier this month, Ladbrokes and Gala Coral came together, creating a £2.3 billion betting group. 888 has also agreed to buy its rival Bwin.party. However GVC Holding, the owner of Sportingbet, is trying to hijack that deal in order to buy Bwin.
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