Last Tuesday, Flutter Entertainment which is one of the most popular gaming operators on the planet announced that it has received approval from Australia’s competition watchdog for its bid to merge with the Australian-based The Stars Group (TSG), its biggest rival. Even though this has been described as more of an “informal approval” it clears a huge hurdle that would have otherwise plagued the process in the not so distant future.
Thanks to this approval from the Australian Competition and Consumer Commission (ACCC) the merger is likely to result in the creation of arguably the biggest online gambling company in the world by revenue. Combined, the companies would have an active customer base consisting of at least 13 million people in over 100 markets across the world. This would then translate to about $4.6 billion in annual revenue.
As per the terms of the proposed merger, Flutter Entertainment’s shareholders will own about 54.64 percent of the new company with the remaining 45.36 percent going to The Stars Group. In addition to that, the new company is expected to deliver on pretax cost synergies of £140m annually. This will further be complemented by opportunities to cross-sell products to their combined customer base.
Also worth noting is the fact that the merger is set to receive a major boost thanks to a partnership in the United States with FOX Sports. The sports media company is pretty vital to this deal since from next year it will have the right to acquire at least an 18.5 percent stake in FanDuel, one of Flutter Entertainment’s business in the United States.
Everything was not looking this good a few weeks ago thanks to some necessary milestone that the companies have to check off before they can proceed with the deal. One of the most notable ones was the launch of a probe into the deal by the United Kingdom’s Competitions and Markets Authority (CMA). This probe is a necessary part of the merger process as the CMA needs to look into whether the mega-merger will hurt competition in the United Kingdom’s gambling market.
This probe into the impact that the merger will have on competition is certainly justifiable considering all of the entities that are involved. The merger is expected to bring some of the biggest casinos and sports betting brands under one roof. These include Betfair, Paddy Power, PokerStars and Sky Betting & Gaming.
Besides the CMA probe and the informal approval from the ACCC, the merger will still need to get official approval from the Australian Foreign Investment Review Board as well as other regulatory bodies in the region.