Flutter Entertainment has officially announced its intentions to buy The Stars Group. If projections come to fruition, this merger is likely to become the leading powerhouse of global online gambling.
Despite some minor complications regarding minority stakes, the two companies were able to set up an all-stakes purchase. The information was made public on October 2nd, with both parties coming forward to clarify details.
- Flutter Entertainment to purchase The Stars Group in an all-share merger.
- The combined company will become #1 in global online and mobile sports betting.
- The move will combine three competitors – Sky Betting & Gaming (SBG), Paddy Power, and Betfair.
A Closer Look at the Flutter and Stars Group Merger
The merger between Flutter and The Stars Group was announced last Wednesday as the move that would create the ultimate global online sports betting leader. Flutter Entertainment is the one performing the takeover, with an all-shares purchase of The Stars Group (Canada), the owner of leading world poker platform, PokerStars.
Sky Betting & Gaming, formerly known as Amaya, is also part of the company, while Paddy Power (Ireland) and Betfair (UK) make up Flutter Entertainment.
Stock Numbers & Shares
Following the merger, the new company is expected to be listed on the London Stock Exchange, as well as Euronext Dublin. The Stars Group shareholders are said to receive 0.2253 shares of Flutter per share owned. This leaves Flutter with the dominant ownership. The former’s owners are expected to end up with 54.64% of the new establishment, while The Stars Group will own 46.36%.
The new company will be worth approximately $12 billion. The total revenue this year would have amounted to $4.7 billion. This rough estimate is only so high because The Stars Group acquired Sky Betting & Gaming (SBG) late in July. Next year’s annual revenue projections are no less than $5 billion high.
Regular employees see this merger as redundancy cuts, carefully defined as “cost synergy” between the two companies. In other words, the terms of the merger have laid out a plan to boost profits up to $173 million before taxes by laying off employees from both companies.
At the same time, administrative roles are also put to the question. Flutter executives are expected to extend the takeover. Flutter CEO Peter Jackson remains at the head, along with most other management positions moved from the old company into the new. Rafi Ashkenazi, CEO of The Stars Group will probably become Flutter’s COO after the merger.
Smaller brands, such as The Star Group’s Fox Bet, as well as Sky Betting & Gaming, are also considered in the merger. Likewise, fantasy sports brand FanDuel –along with its minority shareholders– has been taken into account during the final breakdown of profits. With Betfair topping things off, Fox Sports is looking at a mostly profitable partnership, launching the US sports betting market into a new dimension.
How Will This Impact US Online Gamblers?
There is no denying that the formation of this giant company amongst the profitable sports betting industry is going to cause a ripple effect. What is interesting is that the US is still an emerging marketplace. Following the Supreme Court’s decision last May, 18 states have legalized the industry, but its early days have not yet passed.
So far, the US makes up for no more than 5% of the companies’ total revenue, which mostly profit from other larger destinations – the UK, Australia, and Ireland.
A Total Online Gambling Renaissance
There is more to these companies than just online sports betting. The companies themselves expressed confidence in the success of this deal.
Flutter and TSG are confident that there remains a long runway of growth left for online and mobile gambling.
The Stars Group is a top-ranking global poker network that provides enough potential for Flutter’s endeavors across the vertical. Neither Paddy Power’s nor Betfair’s skins on the iPoker Network are ranked among the top 10 operators. That is bound to change with PokerStars and The Star Group’s experience and skills on their side.
The new company is expected to finalize its set up around Q2 or Q3 of 2020. It will dive into all aspects of the interactive gambling network, online casinos included. With such massive market potential and top-of-the-line instruments, the chances of success are soaring.