Betfair and Paddy Power Merger Causes Industry Shake Up

Paddy Power and Betfair agree a £5 billion merger.

iGaming operators Betfair and Paddy Power have agreed a £5 billion merger to become the UK’s largest operator. (Image: aft243.org)

The latest pair of iGaming operators to agree to a merger was revealed today when Betfair and Paddy Power announced a deal worth £5 billion.

Traditionally two of the largest online bookmakers in Europe, Betfair and Paddy Power have seen their fortunes increase in recent years thanks to flourishing casino and poker platforms.

Rising Fortunes for Betfair and Paddy Power

In fact, according to the latest financial reports, both companies have seen impressive revenue increases in the first half of 2015.

For Betfair, the opening six months of 2015 have resulted in £135.4 million in total revenue.

Thanks to impressive results in the sports betting sector, Betfair managed to post a 15 percent year-on-year increase in the first half of 2015; despite the new UK Point of Consumption tax which hit the company for £12.8 million.

Like Betfair, Paddy Power also saw its revenue improve year-on-year at the start of 2015 thanks to a strong performance in the Australian market.

Total net revenue hit £386 million in the first of the year; a figure which represents a 33 percent increase on 2014’s total. 

However, despite growing fortunes for both companies, the decision to combine their assets and operate under the new name, Paddy Power Betfair, seems to be one that’s be prompted by the changing dynamics of the iGaming market.

With speculation as to which company will take control of bwin.party (888 Holdings or GVC Holdings), other companies have moved to consolidate their assets and form new businesses.

Back in July Gala Coral and Ladbrokes agreed to a merger worth £2.3 billion and it looks as though Paddy Power and Betfair will now be doing the same.

A Sign of the Times

Although the finer details of the deal are still being ironed out, it’s believed that Paddy Power’s shareholders will own a 52 percent stake in the new entity, while Betfair’s investors will have control of 48 percent.

If these terms are firmly agreed, then Paddy Power Betfair would become one of the largest gambling operators in the world and give it a 16 percent share of the UK iGaming market.

As well as moving ahead in the UK market, the new deal will allow the newly formed company to explore more opportunities in foreign markets, including Australia and the US.

Following the announcement of a deal between the two companies, share prices in Betfair increased by 17 percent to £30.60. Similarly, Paddy Power’s stock increased by more than 18 percent after the £5 billion deal was made official.

At this stage it’s not clear how the merger will affect the day-to-day operations of each company, but it’s likely the new entity will look to solidify its market position with a range of new deals and features in the coming months.

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