Final preparations underway for massive tie-up

Flutter, Stars Group Shareholders Sign Off On $6B Tie-Up

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The union of industry giants Flutter and The Stars Group (TSG) is marching toward completion.

TSG stakeholders on Friday overwhelmingly approved the proposed takeover that will make them investors in the world’s largest public gambling company. According to a company press release, approximately 99.99% of those who voted did so in favor of the tie-up.

Shareholders of Flutter approved the acquisition with similarly broad support earlier in the week.

Final closure of the $6 billion transaction will take place May 5.

Flutter/Stars deal all but complete

There are still a few small regulatory hurdles left to clear, but the largest ones are in the rear-view mirror. The authority most likely to take issue, the UK Competition and Markets Authority (CMA), cleared the plan at the end of March.

The companies’ share prices indicate that investors now see the transaction to be a virtual certainty.

Under the terms the companies agreed upon, the deal will result in TSG shares being converted to Flutter shares at a ratio of 0.2253. The more certain the deal becomes, the more the ratio of the companies’ share prices should approach that figure.

Early in March, before the CMA completed its investigation, one TSG share was worth about 0.2052 Flutter shares. Today, the ratio is 0.2256, only about 0.1% off the rate on closure.

Both companies’ stocks have rebounded strongly since the market crash in March and are trading at late-February prices.

Big brands under one roof

TSG and Flutter are enormous corporations to begin with, and both have already done some growing in recent years. Once the deal is complete, the resulting company will comprise a number of the biggest brands in gambling.

TSG, formerly Amaya, began as a small company making slot-machine software. It was used as a part of a reverse takeover in order to help take PokerStars off the hands of Isai Scheinberg and make it a publicly-traded corporation. It then went on to acquire Sky Betting and Gaming in its own multi-billion-dollar deal.

Flutter has its origins in a merger between the British betting giant Betfair and the Irish bookmaker Paddy Power. It added daily fantasy sports company FanDuel, which has subsequently branched out into both sports betting and online casino games, to its portfolio of brands immediately after the fall of PASPA in 2018.

The two companies are similar in size, with Flutter being somewhat the larger in terms of employees but TSG having a higher current valuation. Combined, they are worth over $20 billion and employ approximately 12,500 people.

Some layoffs in the name of cost synergy should be expected once the acquisition is complete.

Eyes on the US online gambling market

The growing US sports betting market was the key driver behind the deal.

TSG abandoned its own BetStars in favor of Fox Bet, looking to make the most of a top-tier media partnership with Fox Sports. In the meantime, FanDuel Sportsbook has established its own dominant position in that space. It is among the market leaders in every US state it serves.

During the initial announcement, Flutter CEO Peter Jackson indicated that the group would prioritize both brands in the US going forward. Bringing the two under one roof should offer a competitive advantage against rivals like DraftKings Sportsbook, BetMGM, and William Hill.

Fox Bet is currently active in New Jersey and Pennsylvania, while FanDuel’s online presence additionally extends into Indiana and West Virginia. It also has retail sportsbooks in Mississippi, New York, and Iowa, and its daily fantasy sports product is available in all but a few states.

Both Fox Bet and FanDuel Sportsbook expect to launch their products in Colorado and Michigan within the year too.

- Alex is a journalist from Dartmouth, Nova Scotia, Canada. Now site runner for Online Poker Report, he has been writing about poker and the online gambling industry in various capacities since 2014.
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