Flutter Entertainment and The Stars Group to merge

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United Kingdom -based betting behemoth Flutter has agreed a blockbuster deal to merge with Canadian online gaming company The Stars Group, it was announced Tuesday.

Shareholders of Flutter, which is headquartered in Dublin, Ireland, will own approximately 54.64 per cent of the combined company when the deal closes next year, while TSG shareholders will own about 45.36 per cent. The Flutter-TSG group would have had a combined £3.8 billion in revenue in 2018, making it the largest online betting company in the world. That assigns an equity value to the target of about 4.95 billion pounds (US$6 billion), which represents a premium of about 40 per cent to Tuesday's closing share price, according to Bloomberg calculations.

Paddy Power and Betfair owner Flutter announced a new deal it said made it the world's biggest online betting firm.

The statement also said that the merger would "ideally position the combined group to pursue the U.S. opportunity through a leading combination of brands, media reach and product offering".

Flutter Chief Executive Peter Jackson expects annual pre-tax cost synergies of about 140 million pounds by the third year after the acquisition's completion.

The new company is also expected to be at least 50% accretive to Flutter underlying EPS in the first full financial year following completion. They plan to offer a broad portfolio of gambling products including online sports betting, fantasy sports, online poker, horse racing, free-to-play and casino games. The combined revenue of the two companies would have been about $6.2-billion a year ago.

Flutter boss Peter Jackson said: "We are confident that we will receive the relevant approvals.".

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The US-facing opportunities that The Stars Group has is one of the reasons Flutter pursued this merger.

"We believe the combination of Flutter and TSG will deliver substantial value for shareholders".

When the deal is complete, Peter Jackson - now CEO of Flutter - will assume the role of CEO of the combined group, while Jonathan Hill, now CFO of Flutter, will assume the role of CFO.

Commenting on today's announcement, Rafi Ashkenazi, CEO of TSG said: "This exciting combination will allow us to enhance and accelerate our existing strategy".

Davy said the deal improves Flutter's position in key growth markets, including the U.S., while it will also bolster scale and market position in its core and more mature end-markets.

Jackson also reassed stakeholders that there should be no legislative issues in Australia where its Sportsbet.com.au and BetEasy of the Stars Group are presently competing with the Totalisator Agency Board (TAB).

The option is an incentive for Fox to use its national media platform to grow the fantasy sports business, which Paddy Power bought for $US465 million previous year.

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