The multi-billion-dollar merger between The Stars Group and Flutter Entertainment has been approved by the UK Competition & Markets Authority (CMA)
The process of the massive merge between The Stars Group and Flutter Entertainment came up to its final stage.
The process itself was launched in February 2020, several months after the merger between The Stars Group and Flutter Entertainment news was announced. The goal behind this was to define whether or not the merger of the gaming industry giants would lead to a “substantial lessening of competition” within the industry.
One more stage is completed by The Stars Group
The Phase 1 review under the Enterprise Act 2002 was approved by the CMA this week. It was estimated that despite the fact that the merger will create the largest betting and gaming company in the world, its nuances won’t lead to a significant loss of options for consumers.
A representative for The Stars Group said the company is happy about the announcement. However, at this stage, the companies are quite far from the final stage of the deal. To become one, Flutter and The Stars Group require further approval by the UK Financial Conduct Authority.
On top of this, they need an approval from the London Stock Exchange, Euronext Dublin, and the Ontario court system. Finally, shareholders in each company will need to find out a single solution at the negotiating table.
Assuming everything proceeds according to plan, the projected completion date is Q3, 2020. However, the overall coronavirus outbreak might affect the deal and prolong the expected terms.
What the partnership will bring?
No matter the terms, once the merge takes place, Flutter Entertainment will get a controlling stake in the new entity. According to the deal, Flutter’s shareholders will hold approximately, 54.6% of the new company. Those with a shares in The Stars Group will own 45.4%.
It is expected that the new entity will be worth around $12.25 billion with annual revenue will reach $4.65 billion. At the same time, the day-to-day operations of both companies won’t change dramatically in the short term. PokerStars will remain as it is, as well as Flutter Entertainment’s primary platforms – Paddy Power and Betfair.
Where the deal may affect is the company’s international status. While the US gambling remains “untouchable” the sports betting is gaining popularity and favor of the authorities, this could be an area where the both companies might benefit.
Is there a loophole to the US markers?
It is crucial to note that both Flutter and The Stars Group have a presence in the US. The former, through Betfair and FanDuel, have platforms in New Jersey. The latter through FOX Bet (formerly BetStars), which is a collaboration with media giant FOX Sports.
The existence of such platforms will give the newly formed entity a solid base in the US.
Flutter’s Paddy Power is one of the biggest sports-betting brands in Europe. Although it technically has interests in New Jersey, thanks to DFS sites FanDuel and DraftKings, the name Paddy Power isn’t familiar to most US consumers.
Launching a Paddy Power-branded platform may now become possible thanks to The Stars Group support. Moreover, the collaboration between the existing subsidiaries is also possible.
It looks like a gained power and leading position might be a good base for putting a stranglehold of Flutter Entertainment and The Stars Group on the US market.