Paddy Power and Betfair take steps to join forces…
Released to the press today was the news that Paddy Power and Betfair are discussing the terms of a merger which would see the giants of the betting world team up as one.
Details from the press release on www.paddypowerplc.com follow below, the news will send waves through the industry who have also seen Gala Coral and Ladbrokes move to take similar steps in an announcement made just last month.
“The Boards of Paddy Power and Betfair are pleased to announce that they have reached an agreement in principle on the key terms of a Possible Merger of Paddy Power and Betfair to create Paddy Power Betfair plc (the “Combined Group”).
The Possible Merger would create one of the world’s largest public online betting and gaming companies by revenue with enlarged scale, capability and distinctive and complementary brands. 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.
Paddy Power shareholders would own 52 per cent. and Betfair shareholders would own 48 per cent. of the issued and to be issued share capital of the Combined Group;
Immediately prior to completion, Paddy Power shareholders would receive a special dividend of €80 million;
Gary McGann, Chairman of Paddy Power, would become Chairman of the Board of the Combined Group;
Breon Corcoran, CEO of Betfair, would become CEO of the Combined Group.
Andy McCue, CEO of Paddy Power would become COO and an Executive Director of the Combined Group. Alex Gersh, CFO of Betfair, would become CFO and an Executive Director of the Combined Group;
The Board of Directors of the Combined Group would also comprise other non-executive directors nominated equally from each of Paddy Power and Betfair; and
The structure of the Possible Merger is being finalised with a view to maximising benefits to shareholders and other stakeholders, and it is expected that the Combined Group will maintain a significant presence in Ireland and in the UK.
Compelling Strategic Rationale
Creation of one of the world’s largest public online betting and gaming companies with revenues of over £1.1 billion (€1.5 billion1) in their last financial years;
The Combined Group’s scale and capabilities would leave it better placed to compete in existing and new markets;
Dual brand strategy in Europe utilising the distinctive and complementary brands of Betfair and Paddy Power;
Complementary online business and geographic mix;
Diversified group with strong platforms across online and retail in the UK and Ireland, and attractive international growth opportunities in Continental Europe, the US and Australia; and
Cost and revenue synergies from efficiencies which reflect the complementary nature of the businesses and through leveraging of the Combined Group’s enlarged scale.
Discussions remain ongoing regarding the other terms of the Possible Merger. The terms of the Possible Merger remain conditional on, inter alia, completion of due diligence and the parties reserve the right to waive these conditions and, with the agreement of the other party, to vary the form of consideration and/or make an offer on different terms. While there can be no certainty that any transaction will occur, Paddy Power and Betfair expect to provide a further update over the coming weeks.
The structure of the Possible Merger remains under consideration. Accordingly until further notice, both the Code and the Irish Takeover Rules apply including the disclosure rules under Rule 8 of the Code and Rule 8 of the Irish Takeover Rules. For the purposes of the Code, Paddy Power is the offeror and Betfair is the offeree. For the purposes of the Irish Takeover Rules, Betfair is the offeror and Paddy Power is the offeree.
In accordance with Rule 2.6(a) of the Code, Paddy Power has until 5.00pm on 23 September 2015 (or such later time and/or date to which this date may be extended by the UK Takeover Panel in accordance with Rule 2.6(c) of the Code and Note 1 on Rule 2.6) to announce either a firm intention to make an offer for Betfair in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. If the Possible Merger is structured with Betfair as the offeror, this deadline will not apply.
This announcement has been made with the consent of Paddy Power and Betfair.”
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