Gambling Mega Merger Between Flutter And Stars Given Green Light

Gambling Mega Merger Between Flutter And Stars Given Green Light

Following an investigation by the Competition and Markets Authority, the gambling industry ‘mega merger’ between Flutter (owned by Paddy Power) and Canadian based Stars has been given the go-ahead.

The investigation which began in February 2023, concluded last month. It cleared the £10 billion deal which saw Flutter acquire Stars. Stars had previously bought Sky Betting and Gaming in April 2018 for an agreed price of $4.7 billion.

Punters fears about odds and promotion allayed

There were initial concerns put forward by the Competition and Markets Authority that punters would end up with less favourable odds and would miss out on generous promotions if the merger went ahead. However, the investigation found that although merging companies would compete closely, there were enough ‘close competitors’ to mean that the merger wouldn’t affect anyone who chose to bet online.

As part of their investigation, the Competition and Markets Authority found that, in general, there was enough healthy competition between current online betting companies for new customers and for regular customers to switch should they choose to. They also stated there were enough sports book business operators of varying sizes to ensure the decision was sustainable for all. Current rivals and close competitors are Bet365, Coral, GVC/Ladbrokes and William Hill.

The deal is scheduled to complete during the second half of 2023 and the two companies hope to make what they’re terming ‘cost synergies’ following completion. The announcement was hailed as a significant milestone by the Chief Executive of Flutter, Peter Jackson. He made the assurance that they would be working closely with all the remaining regulatory authorities both nationally and internationally to make sure they got all the approvals they needed.

Flutter and Stars hope to achieve £140m of 'cost synergies' as a result of the deal, which is due to complete in the second quarter of 2023.

USA market is now a target

Most states in the USA have fairly relaxed sports betting laws and this means that with the merger of the two companies they can effectively start to tap into the American markets. This is potentially good news due to the tighter restrictions and tougher regulations placed upon betting in the United Kingdom over the last few years which have created challenges in the marketplace.

Timescales for the merger are likely to be somewhat delayed with the ongoing Covid-19 outbreak but should only be on hold temporarily. Other regulators in Austria, Germany and the USA have also given their conditional approval for the merger as well.

Good news comes after a difficult month on the stock market

The deal is also seen as good news for Flutter after a particularly testing few weeks on the stock markets due to the fallout from the impact of coronavirus on the UK stock exchange. The market value of the Paddy Power owned company had seen its value shrink by a quarter in the last four weeks. This is mainly due to the number of sporting fixtures that have been cancelled across the board.

The share price of the company jumped by just over nine percent in the wake of the Competition and Markets Authority approval of the merger. It now stands at 7.258p. This comes in the wake of continuous drops due to the global health pandemic.

The Financial Conduct Authority had previously stated that Flutter had been the FTSE’s second most shorted stock during the previous week and its stock had gone down by well over thirty percent due to lost revenue from postponed or cancelled sporting events.

This merger is just one of several different ones that the Competition and Markets Authority have been working on in recent months.