Betfair and Paddy Power Unite in 5 Billion Pound Deal

Longtime competitors Betfair and Irish rival Paddy Power have aligned to take the lead in the UK gambling market in a massive deal.

Eight Figure Deal

Though some formalities remain in finalising the merger, the key terms have already been agreed upon to form what becomes one of the largest online betting and gaming providers in the world, with a revenue of over 1.1 billion pounds.

Mergers in the UK have been frequent this year, enabling operators to survive and flourish while minimizing the tax hits from increased bills and tighter regulation that the UK otherwise potentially imposes.

Leadership

Leading the new group is Betfair Chief Executive and ex-Paddy Power Chief Operating Officer Breon Corcoran. Paddy Power Chairman Gary McGann is set to keep his role in the combined group, while Paddy Power CEO Andy McCue would become COO. Betfair finance chief Alex Gersh would remain in a similar capacity.

Topping the Market

Corcoran pointed out to Reuters that the new deal puts the two companies in a leading competitive position not only in the UK, but other strong emerging markets such as Ireland, Australia and the United States.

As more countries regulate, the two companies have clearly formed a force to be reckoned with, ready to adapt to new regulation more quickly while reaching more customers through mobile and tablet-supported technology.

The news spurred a jump in Paddy Power shares to 18% and Betfair's to 17%.

Terms

The new deal awards 52% of the group to Paddy Power shareholders and 48% to Betfair's. Paddy Power shareholders also will receive a dividend of 80 million euros ($91.9 million) to complete the sale.

Paddy Power brings almost 600 betting shops into the fold, over half of which are in the UK. The new group bringing Paddy Power's over would take the lead in UK market volume, with a share of 16 percent. The deal would vault the group past over the recently merged Ladbrokes Coral group's 14 percent share, as well as William Hill and Bet365.