Paddy Power and Betfair Merge in a £1.1 Billion Deal
Paddy Power and Betfair have agreed to a merger in a move which continues the consolidation trend in the gambling industry. The deal unites Paddy Power, a giant in the brick-and-mortar casino industry, and Betair, the world’s largest Internet betting exchange.
The deal allows the most prominent Irish gambling company to gain entry into the US market. Betfair is part of the licensed New Jersey online gambling industry.
Terms of the Merger
Breon Corcoran, the former Paddy Power executive who became Betfair’s CEO three years ago, has been tabbed to be the chief executive of the combined corporation. Andy McCue, the current CEO of Paddy Power, is expected to be chief operating officer. Gary McGann, who is the chairman of Paddy Power at present, will be the chairman of the combined firm.
Paddy Power shareholders are going to own 52% of the merged company, while Betfair shareholders are going to own the other 48%. It is still unknown where the new headquarters will be, but the likeliest HQ would be Dublin, Ireland, the home of Paddy Power.
About Paddy Power
Paddy Power is an aggressive, controversial gaming brand. The Irish casino and sportsbook has its own online sites, so the transition for the Betfair brand should be quick. In the offline betting, Paddy Power operates in Ireland and the UK through a chain of betting shops. The company also conducts Ireland’s largest telephone betting operation.
In the Internet gambling sphere, Paddy Power offers online poker, online bingo, online casino games, along with Internet versions of spread betting and sports betting. Paddy Power thus offers a full range of gaming choices. Paddy Power is listed on the London and the Dublin stock exchanges.
Betfair operates the world’s largest betting exchange, which offers a different form of wager to the traditional sportsbook. Instead of betting against the house against lines set by a bookmaker, a betting exchange allows gamblers to wager in real time against other punters. In many ways, betting exchanges are closer in form to the daily fantasy sports site.
In the United States, Betfair also owns the TVG Network, which is broadcast in 31 states. TVG is a horse racing channel which offers analysis, features, interviews, legends shows, and handicapping tips. Tops programs include “The Works”, as well as its much-lauded lead-up to the Breeders Cup.
In New Jersey, Betfair operates BetfairCasino.com in partnership with the Golden Nugget Casino, one of 8 Atlantic City casinos.
Breon Corcoran as CEO
Breon Corcoran has received praise for turning around the Betfair product, which once was considered to be struggling. Corcoran increased the UK customer numbers by 250% in three years time.
The value of Betfair’s shares has increased from about £750 million to £2.4 billion over that time. The company’s recovery makes the current deal much bigger news than it otherwise might have been.
While it is not often seen that the chief executive from the junior partner in a merger is given a CEO position, this merger is a bit different. The two parties are rough equals, given the 52/48 split in ownership. Also, given the respect Corcoran has bred in his stints with both companies, he is in a unique position to command respect and camaraderie in the merger and post-merger process.
Reasons for Merger
The combined company is estimated to be worth £1.1 billion. In a joint statement, the companies said their brands compliment each other. The merger also increases the scale for attracting customers, while providing a chance for quicker expansion into certain markets.
It is believed the deal should allow the combined entity to expand into the United States, Europe, and Australia. For instance, Betfair has a license to operate in Italy and Bulgaria, while Paddy Power has a significant foothold in Australia.
The executives released a statement which said, “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.”
In other gambling industry consolidation news, 888 Holdings still holds the inside track to purchasing Bwin.Party. GVC Holdings continues to gain control of Bwin.Party through a last-minute buyout.
The various mergers continue a recent trend of consolidation in the online gambling market. Several reasons exist for the mergers, but the Point-of-Consumption Tax in the UK and the desire to expand into legalized gambling in the United States tend to be the dominant factors.
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