Betfair, Paddy Power reach agreement on 6-billon-pound tie-up

Tue Sep 8, 2015 4:28am EDT
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By Conor Humphries

DUBLIN (Reuters) - Betfair BETF.L and Irish rival Paddy Power PLSA.I have reached agreement on a £6 billion pound ($9.2 billion)combination, first set out last month and designed to secure leadership of Britain's competitive online gambling market.

As in a provisional deal announced in August, Paddy Power shareholders will own 52 percent of the group with Betfair investors owning the rest, if the deal is approved by shareholders, Betfair said on Tuesday.

The betting sector has seen a string of deals this year, as companies respond to tighter regulation and higher tax bills in Britain and across Europe by looking to bulk up and better compete in an online market buoyed by the increasing use of mobiles and tablets.

Ladbrokes LAD.L and Gala Coral struck an all-share deal in July, while GVC Holdings (GVC.L: Quote) last week agreed to buy Digital Entertainment BPTY.L.

Under the latest deal, shareholders of Betfair - an exclusively online business best known for technology which allows gamblers to bet against each other as opposed to taking odds offered by a bookmaker - will receive 0.4254 new shares in the combined group in exchange for each Betfair share.

Paddy Power shareholders will receive a special dividend of 80 million euros.

The new group, which will be called Paddy Power Betfair and whose stock market value would be some 6 billion pounds on the basis of the combined valuations of the two partners, will be market leader online in the UK with a share of 16 percent, according to industry data.

That would surpass a merged Ladbrokes Coral group on 14 percent, as well as William Hill (WMH.L: Quote) and privately owned Bet365.   Continued...