Paddy Power and Betfair unveil £5 billion merger

Bookies Paddy Power and Betfair have agreed in principal to merge.

Shareholders in Dublin-based Paddy Power will own 52 percent of the combined company, with holders of London-based Betfair owning the rest, the companies said in statements today.

Immediately prior to completion of the deal, Paddy Power shareholders would receive a special dividend of 80 million euros.

The tie-up is subject to due diligence by both companies first and then approval both by shareholders and competition regulators.

Paddy Power (LON:PAP) has announced plans to merge with rival Betfair (LON:BET) in a deal to create a gaming giant.

The board of directors of the combined group would also comprise other non-executive directors nominated equally from each of Paddy Power and Betfair.

Gary McGann, chairman of Paddy Power, is expected to become chairman.

Other changes would see Breon Corcoran, Betfair chief executive, become the newcompany head.

The companies said the deal had “compelling strategic logic”, and would strengthen their positions in the market.

Ladbrokes and Gala Coral also recently sealed an all-share merger, creating a £2.3bn betting group.

Meanwhile, Paddy Power posted a 33pc jump in operating profit in the first half, taking in €80m.

Betfair comes from a newer side of the bookmaking fence.

While sports betting remains the company’s main source of income, contributing £89.9 million to the total revenue figure, Betfair’s US business experienced the most growth in the quarter, with revenue from this division up 42% year-on-year to £20.1 million.

The move would result in a combined group with a revenue of over £1.1 billion, leaving them “better placed to compete in existing and new markets”.