Betfair and Paddy Power Agree On Merger Terms; Job Losses Expected
Betfair and Paddy Power have confirmed details of their £5.8 billion merger that will create a massive FTSE100 gambling company.
Paddy Power had joking claimed on social media that the new company would be called 'Betty Power', however the new company is set to be named Paddy Power Betfair and sees Paddy Power shareholders hold a 52% stake in the new company with Betfair’s investors holding the remaining 48%. Current Betfair chief executive Breon Corcoran will head the merged company.
The deal creates a company with £1.2 billion in sales, an impressive figure aided by Betfair’s unrivaled betting exchange – the brainchild of Andrew Black – and Paddy Power’s 336 UK-based and 252 Ireland-based betting shops.
Speaking of the merger, Betfair’s chairman, Gerland Corbett, said: "The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands.
"Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value."
Shareholders of Paddy Power, who are set to receive a special dividend of some €80 million, are expected to vote on the merger in December with a completion date pencilled in for the first quarter of 2016.
The deal sees a company with £1.2 billion of sales created, an impressive figure aided by Betfair’s unrivalled betting exchange – the brainchild of Andrew Black – and Paddy Power’s 336 UK-based and 252 Ireland-based betting shops.
Both Paddy Power and Betfair will continue to be run as separate brands in the UK, Ireland and Italy, although the headquarters of Paddy Power Betfair are set to be in the Irish capital, Dublin, sparking rumors regarding job security of the staff currently employed at Betfair’s Hammersmith base.
The newly merged company will boast of 7,000 employees, and although both companies have forewarned about a reduction in headcount as part of the planned £50 million in annual cost savings, solid details are still to emerge.
Investors in both companies reacted positively to the news of the proposed merger with the share prices of both soaring and continuing to hold their value. The same can’t be said for rivals William Hill and Ladbrokes — themselves in the midst of a merger — whose shares both fell when the deal was in its infancy as their investors were presumably worried about the new giant company that Betfair and Paddy Power will create.
Late last year, William Hill had a $1.14 billion bid for 888 Holdings rejected after members of the Shaked family, key figures in 888 Holdings, said the proposed deal massively undervalued the company. 888 Holdings, of course, missed out on their attempts to purchase bwin.party and its chairman, Brain Mattingley, has already issued a statement that 888 Holdings are not a takeover target and are now looking for further acquisitions after bwin.party chose to accept GVC Holdings’ offer.
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