Author: Joe Kizlauskas
Last Updated: 21st July 2020
While the COVID-19 pandemic threatens to hit the betting and gaming industries, Flutter Entertainment and The Stars Group have received industry reports on the forthcoming merger of the pair.
Having settled on the merger in 2019, an agreement yet to be authorised by the Competition and Markets Authority, the company will set out to build a more competitive product range of’ the best-in-class sports betting, poker, casino, fantasy sports and free-to-play offerings.’
Flutter also announced plans to accelerate execution of its’ four-pillar strategy’ by capitalising on new prospects for growth across key markets as well as further expansion into the US.
In addition, the company has presented its strategy to generate significant value through synergies in material costs, sales, and financing.
Flutter also confirmed in it’s update that it has suspended its 2020 dividend because of the COVID-19 pandemic as betting figures slumped. However, the gambling group has confirmed that it will be paying its 2019 dividend in ordinary shares and shelving a pro-rated dividend in respect of its merger with TSG.
The Flutter news comes as TSG announced that a special shareholders meeting would be held on 24 April to approve the planned all-share merger with Flutter.
The final dividend of Flutter for the financial year ending 31 December 2019 was priced at 122 pence per share and will be paid in shares of Flutter instead of cash, subject to the approval of the shareholder of Flutter.
In addition, Flutter will no longer pay its shareholders a pro-rated dividend for the period from 1 January 2020 until the transaction is closed, as confirmed by the arrangement. It will also suspend its dividend for the year ending 31 December 2020.
Flutter chief executive Peter Jackson said:
“We are pleased to publish our prospectus and circular in relation to our combination with The Stars Group. In these challenging times I am more convinced than ever of the strategic fit of these two complementary businesses.
“The combined business will enjoy improved geographic and product diversification and allow us to advance our strategic goals. I am delighted that Rafi has agreed to join the Flutter Board and to be available to me as a consultant given his extensive knowledge of Stars’ international business.
“We continue to work with various competition and anti-trust authorities globally to secure the few remaining approvals required. We do so while never losing sight of our current primary objective to ensure the safety of our staff and customers during these unprecedented times.”
In the medium term, the Flutter Board will continue to strive for a leverage ratio of 1x to 2x. This will continue to track the sporting calendar and related sport betting results, as well as the expected deleveraging and balance sheet position of the combined business.
Flutter and TSG have both committed to several changes to the board of directors under the terms of the Ccmbination.
Divyesh Gadhia, Rafeal Ashkenazi, Richard Flint, Alfred Hurley, Jr, David Lazzarato and Mary Turner are all to take on the roles of Flutter’s non-executive directors.
Gadhia was named as the board’s new deputy president, while Ashkenazi decided to serve as Flutter’s consultant after ‘extensive discussions about the optimal construct of the senior executive team.’
Bolz and Timmons will resign as non-executive officers, while Dyson has announced that he will withdraw from the audit committee and relinquish his role as senior independent director and president of the appointment committee, with Andrew Higginson taking those roles.
Commenting on potential reforms to the board, Flutter chair Gary McGann said: “I am looking forward to working with the new Flutter board in realising the exciting opportunities that will emerge from the combination of these two great companies.
“I would like to take this opportunity to note the commitment and dedication shown by Emer and Jan during their time on the Flutter Board, to thank them for their support and to wish them both well for the future.”