CMA clears Paddy Power owner Flutter’s £10bn gambling merger
A gambling mega-merger between Paddy Power owner Flutter and Sky Bet owner Stars got the green light today from the UK’s competition watchdog.
The Competition and Markets Authority (CMA) cleared Flutter’s £10bn purchase of Stars after opening an investigation into the tie-up at the start of February.
The CMA found punters would not receive less favourable odds or less generous promotions as a result of the tie-up due to strong competition in the betting market.
Rivals include rivals William Hill, Bet 365 and GVC/Ladbrokes as well as Coral.
“The CMA therefore found that, while the merging companies compete closely, they are among a number of close competitors, and the merger will not worsen the offering to people who choose to bet online,” the watchdog said.
Flutter and Stars hope to achieve £140m of cost synergies as a direct result of the deal, once it completes in the second quarter of 2020.
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They have also targeted the US market, where most states have relaxed sports betting laws. That has created a new area of expansion for betting giants as they face tighter regulations in the UK.
Flutter chief executive Peter Jackson said: “This morning’s announcement from the CMA marks a further important milestone in the process towards completion of our proposed combination with The Stars Group.
“We continue to work with the remaining international regulatory authorities to obtain the last of the outstanding approvals. Separately last week we published the necessary documentation ahead of the shareholder votes in April and we continue to make good progress in our post-completion planning.”
Other regulators have offered their conditional approval, with timescales delayed due to the coronavirus crisis.
The approval of its long-touted merger offers Flutter some reprieve after short-sellers targeted the firm amid the ongoing coronavirus fallout on UK stocks.
The Paddy Power owner’s market value has shrank by a quarter this past month over its reliance on sports fixtures cancelled in the wake of coronavirus.
Flutter’s share price jumped 9.4 per cent to 7,258p on the CMA’s approval, after weeks of drops due to the coronavirus crisis.
Flutter’s stock has plunged as much as 35 per cent as a result of a wave of postponed matches across almost all sports.
The Financial Conduct Authority (FCA) said the company was the FTSE’s second most shorted stock in the past week.
Hedge funds have also targeted William Hill and Easyjet. The airline has witnessed its share price halve over March and yesterday grounded all planes for the foreseeable future.
Its founder, Sir Stelios Haji-Ioannou, yesterday urged Easyjet to turn to the markets to raise cash to survive the coronavirus lockdown. He also threatened to oust the board over a £2.5bn order of planes from Airbus.