CMA Gives Flutter And TSG Green Light For Merger

The United Kingdom Competitions and Markets Authority (CMA) has provided the green light to go ahead with the merger of The Stars Group (TSG) and Flutter Entertainment, clearing ‘phase 1’ of its competition analysis.

Last October, Flutter and TSG settled on a mix of all-share, as the two companies set out to build the overall global market leader that operates across all vertical online gambling. The CMA announced today that after the Phase 1 review of the CMA under the Enterprise Act 2002, this mixture was ‘unconditionally cleared’.

Welcoming the announcement, 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.”

The proposed deal remains subject to approval at its Extraordinary General Meeting on 21 April 2020 by Flutter shareholders and on 24 April 2020 by shareholders of The Stars group.

The deal still awaits approval from ‘a small number of other regulatory bodies, some of whom have have indicated that their usual timeframes may be delayed by the current COVID-19 crisis’

TSG said in a statement: “The Stars Group and Flutter continue to work diligently towards completion of the Combination, which remains conditional upon, among other things, certain approvals by each of Flutter’s and The Stars Group’s shareholders, Ontario court approval of the plan of arrangement, certain approvals from the United Kingdom Financial Conduct Authority, London Stock Exchange and Euronext Dublin, and any remaining relevant merger control, foreign investment and gaming related approvals.”

The primary goal of the CMA investigation was to decide if, as a result of the contract, ‘customers who choose to place bets online could be offered less favourable odds, less generous promotions or poorer quality products, for example as a result of reduced innovation in pricing or app experience.’

The CMA found that ‘the merger will not worsen the offering to people who choose to bet online ‘due to the high degree of rivalry between betting operators.

Under phase 1 of its assessment, the CMA considered the effect of Flutter’s Paddy Power and Betfair assets combined with TSG’s Sky Bet asset, allowing for approval of the merger.

The Flutter-TSG combination will now proceed to ‘phase 2’ of its evaluation, in which the CMA will provide its decision on marketplace factors measuring the 40% take-up of UK online betting by the deal – far above the 25% regulatory guidance given by the CMA.

Flutter emphasised earlier this week that its multi-billion pound merger with TSG remains on track, although the company continues to make some changes to COVID-19.

Flutter reported in its update that it expects global COVID-19 disruptions to have an impact on the ‘combined company financial profile.’ The operator community, however, commended its emphasis on M&A, noting that stronger cash generation, scale and combined synergies would help the company outride COVID-19 factors.