Paddy Power and the London-listed betting exchange Betfair have recently announced that they have agreed a €5.5 billion merger, creating one of the world’s biggest gambling groups under the name Paddy Power Betfair. The new group, dubbed “Betty Power” in the industry, expects to make annual revenues of €1.5 billion and is currently valued at €8 billion on the stock market.
The group plans to establish its headquarters and staff in Dublin, where corporation taxes and less regulation in relation to gambling are more attractive. Paddy Power shareholders will own 52% of the combined business with Betfair investors holding the remaining 48%. However, its primary listing will be on the London-exchange, while a secondary listing is planned for the Ireland.
The merger has been estimated to cut €69 million annually for the group through shared expertise. However, according KPMG 83% of all mergers fail, with the primary reason being stated as a clash of cultures between the two companies. The question remains whether the aggressively marketed Paddy Power and the more restrained, online-only Betfair can really create meaningful synergies across the group. Or if this is an ill-placed a reaction to the €3 billion Ladbrokes-Gala Coral tie-in announced this summer.
Words by Adam Hetherington, Business Editor