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Paddy Power parent company Flutter to merge with Stars Group

LONDON, ENGLAND - NOVEMBER 13: A general view of Paddy Power book makers on November 13, 2018 in London, England. As campaigners continue to call for restrictions or a complete ban on fixed odds betting terminals (FOBT's) in bookmakers, the Chancellor Philip Hammond has put back a planned policy cutting the maximum spend on the machines from £100 GBP to £2 by six months, to October 2019. (Photo by Dan Kitwood/Getty Images)

Bookmaking giants Flutter Entertainment and The Stars Group have agreed a merger that will create the world’s largest online betting company by revenue, as both companies look to position themselves to take advantage of the opening of US gambling markets.

Ireland-headquartered Flutter, formerly known as Paddy Power Betfair, was itself formed from a merger of those two brands in 2016 and owns other major sports gaming brands including horse and greyhound racing network TVG and fantasy gaming service FanDuel. 

The Stars Group, based in Toronto and listed on both the Nasdaq and Toronto Stock Exchange, is primarily known for its online casino and gaming websites such as PokerStars and Full Tilt Poker.

The all-share merger will see Flutter shareholders own 54.64 per cent of the new company, with TSG shareholders owning 45.36 per cent. Based on revenues for the 2018 financial year, annual revenues would have totalled £3.8bn ($4.7bn), making Flutter-TSG the largest online betting and gaming operator globally.

The announcement  claimed that the combined new company would “be well diversified from both a geographical and product offering perspective” and help to accelerate Flutter’s four-pillar growth strategy, including maximising growth in its core markets of the UK, Ireland and Australia.

It is clear, however, that the move has been made with more than one eye on the US market, where 12 states now offer legalised sports betting. The merger would “ideally position the combined group to pursue the US opportunity through a leading combination of brands, media reach and product offering”, said the announcement. 

Flutter chief executive Peter Jackson is set to retain his role in the combined group, which will also remain headquartered in Dublin, with its main listing in London. Rafi Ashkenazi, chief executive of TSG, will becoming chief operating officer of the new company.

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