Former rivals Paddy Power and Betfair are planning to create one of the world’s largest betting and gaming companies.
The London Stock Exchange made the announcement on its website on Wednesday.
Under the terms of the merger, Paddy Power shareholders will hold 52 percent of the combined company, while Betfair shareholders will own the remaining 48 percent. According to the London Stock Exchange, Paddy Power shareholders will get an €80 million special dividend immediately prior to the deal’s completion.
Paddy Power predicted the potential merger last month, and even jokingly tweeted the new company will be called Betty Power. But seriously, the new company will be named Paddy Power Betfair Group, according to RTE News.
Hot on the heels of the Ladbrokes/Coral merger, we can exclusively reveal that we have merged with Betfair. Our new name is Betty Power.
— Paddy Power (@paddypower) July 24, 2015
Betfair CEO Breon Corcoran will become the chief executive of the new gambling group, with Paddy Power Chairman Gary McGann to become the chairman. Paddy Power CEO Andy McCue will take over as chief operating officer. McCue will share the executive director position with Betfair Chief Financial Officer Alex Gersch.
The two companies expect to generate more than £1.1 billion in revenues with the new betting company. However, negotiations are still ongoing and both parties cautioned that there’s no guarantee the deal will go through.
“The proposed merger with Paddy Power is hugely exciting. It would create a truly global sports betting group with unmatched products and talent, and significantly enhanced scale,” Corcoran said.
Paddy Power recently reports that its operating profit grew 33 percent to €80 million in the first six months of 2015, despite taking a €32 million hit from new taxes and product fees. Its net revenue for H1 was also up by 25 percent, driven by double-digit retail and online divisional growth.
“We have made substantial progress implementing the strategy we set out in March, with further payback to come from new mobile product releases, refreshed marketing campaigns and efficiency gains. We now expect full year 2015 reported operating profit to be a mid- to high-single digit percentage above 2014 and the consensus market forecast,” McCue said.
Betfair’s revenue in the first quarter to the end of July was also up by 15 percent to £135.4 million. Revenue from regulated markets was up by 24 percent to £116.3 million, while mobile revenue increased by 57 percent. The group’s earnings before EBITDA was up by 19 percent to £41 million.
The Paddy Power-Betfair potential merger came weeks after Ladbrokes announced that it will buy the Coral Group in a £2.3 billion share-exchange deal. The combined business—Ladbrokes Coral Plc—will have an estimated £2.1 billion annual net revenue.
Under the terms of the deal, Ladbrokes will have 51.75 percent of the new company and will issue new shares to the private-equity owners of Coral Group, which include Anchorage Capital Partners and Apollo Global Management.
Ladbrokes CEO Jim Mullen was tapped to lead the combined company, with Gala Chief Executive Carl Leaver serving as the executive deputy chairman.
With the Ladbrokes-Coral Group and the Paddy Power-Betfair tie ups, William Hill is left a wallflower in the merger dance. Early this year, the UK-listed bookmaker started acquisition talks with 888, but the negotiations failed, and now 888 is bidding for Bwin.party. Still, Financial Times editor Jonathan Guthrie believes William Hill is larger than Ladbrokes and Coral combined.