The merger of Paddy Power and Betfair has officially been completed, after it was agreed upon in September of last year. The deal is believed to be worth around £5 billion, with the new company making one of the largest online gambling businesses in the world. It means that the new company’s stocks can trade on the London Stock Exchange.
The new company, which will bear the imaginative name of Paddy Power Betfair, will boast a revenue of in excess of £1.1 billion. Breon Corcoran is to be the Chief Executive Officer, whilst Alex Gersh will be the Chief Financial Officer and Ian Dyson will be a non-executive director. It sees two of the industry’s fastest growing operators join forces.
How the New Business Will Be Structured
Whilst the two businesses are now a combined entity, they will still operate as separate ones to all intents and purposes. Betfair is an entirely online operation, whilst Paddy Power is based both online and in physical shops around the country and in Ireland. Whether Betfair customers will be able to deposit and withdraw money from their accounts using Paddy Power shops remains to be seen, but is likely if other mergers are anything to go by.
The shareholders of Paddy Power will own 52% of the new company, whilst Betfair’s former shareholders will have a claim to 48% of Paddy Power Betfair. The group will locate its headquarters in Dublin, but will have what is being referred to as a ‘significant presence’ in the rest of Ireland and the United Kingdom. Sadly, there are likely to be job losses as a result of the merger, which were warned about back in 2015 when the notion was first mooted.
A ‘Global Gambling Business’ Is on the Cards
There have been numerous mergers and takeovers in recent times, all seemingly happening as the industry braces for tougher times ahead. Rumours of a limit being added to the maximum stake on Fixed Odds Betting Terminals that would hurt physical betting shops continue to swirl, whilst the merger of Ladbrokes and Gala Coral had created a new market leader, overtaking William Hill as the country’s biggest bookmaker.
Now Paddy Power Betfair will take that honour, with an annual revenue of £1.1 billion and a 16% market share. The fact that Paddy Power and Betfair are two well-known and distinctive brands and offer completely different things to each other means that they’ll be complimentary moving forward. The merger puts them in what Breon Corcoran believes is a ‘market leading position’.
The company already has bases in the United Kingdom, Ireland, Australia and the United States of America, meaning that it has a global presence. Now it has the money and the power to extent that out even further. With more than four million customers already, as well as in the region of six hundred betting shops across Britain and Ireland, it’s little wonder that ‘Betty Power’, as the industry has dubbed the company, feels they’re well placed for global expansion.
What Is Being Said About the Merger
The Chairman of Paddy Power, Gary McGann, said last year, “The merger of Paddy Power and Betfair will create a company of world-class capability and people who will deliver substantial up-front synergies and a platform for very exciting business expansion.” The thoughts were echoed by the Betfair Chairman, Gerald Corbett, who referred to the ‘huge strategic sense’ that the deal presented to both companies.
Breon Corcoran, meanwhile, said, “We fundamentally believe this industry is all about scale. By putting together two distinct but phenomenally strong brands, we’ll have a market leading position in the UK, Ireland, Australia and in the United States.” That lined up with the thoughts of Paddy Power’s Chief Financial Officer, Cormac McCarthy, who referred to the ‘attractive opportunity’ presented by the merger.
No More Hurdles Left to Clear
There was a moment’s concern for all parties as they waited for news from the Competition and Consumer Protection Commission over whether the deal would be allowed to go ahead, but once it confirmed that the deal wouldn’t ‘substantially lessen competition in any market for goods or services in the State’, the final hurdle was cleared. It paved the way for the merger to be completed, with final details all but sorted.
When the announcement was first made back in September of 2015, shares in Betfair went up 17% and Paddy Power’s jumped by more than 18%. It’s likely that those jumps will be consolidated further thanks to the confirmation of the merger, putting Paddy Power, which was formed in 1988 and is more of a ‘traditional’ bookmaker, in bed with the more modern Betfair, which is best-known for its exchange service.