The Stars Group and Flutter Ent. Confident Mega-Merger Will Legally Go Ahead

Following the announcement this morning that Flutter Entertainment will acquire The Stars Group (TSG), representatives of the panel stressed their trust that the mega-merger would obtain the required legislative approvals to continue.

Confirmed in a conference call with both buyers and sector commentators, Peter Jackson, Chief Executive of Flutter, stressed that he thought there should be no worries about whether the partnership would cross competitive controls in the UK.

The merger shall be subject to examination by the competition authorities of the United Kingdom, which often investigate any merger in which the total UK turnover reaches £70 million (€ 78.6 million/$86.0 million) or the combined business value exceeds 25%.

“We’re very respectful of the competition authorities such as the CMA in the UK,” Jackson said. “We look forward to working with them in due course and we are confident that we will receive the relevant approvals in due course.”

Immediately after closure of the Combination, Flutter Shareholders would own about 54.64 per cent and TSG Shareholders would own about 45.36 per cent of the Combined Group’s share capital.

Jackson also reassed stakeholders that there should be no legislative issues in Australia where its and BetEasy of the Stars Group are presently competing with the Totalisator Agency Board (TAB).

He added: “We are very respectful; we know what we need to do in Australia and will work and engage with them in due course.

“We both run brands in Australia that are trying to take on the might of the TAB, they’re the behemoth in the market and we’re just small corporate bookmakers nipping at their heels.”

Jackson stated that the mega-merger will use a comparable approach to Flutter’s approach of running products such as Paddy Power and Betfair in the UK when it relates to running various products in the same jurisdiction.

“We’ve had a lot of experience of operating a multi-brand strategy and the way we want to continue to do it in the US is to maintain the purity in terms of customer databases,” Jackson said.

“We have many customers who play daily fantasy sports on FanFuel and we plan to cross-sell those players into sports betting, gaming and horse racing as appropriate, but we don’t try to move players from Paddy Power to Betfair and we won’t try to move players between any of these new brands.”

It is anticipated that consent of shareholders from Flutter and TSG will be requested in the second half of 2020. Depending on multi-market legislative authorisation, completion is anticipated to happen during the second or third quarter of 2020.

According to TSG CEO Rafi Ashkenazi, the mega-merger is mainly concentrated on the two firms’ development.He explained: “This is about driving growth into the business.

“Cost synergies are important but they’re not why we’re doing this deal.”

Upon completion, it is intended that the Combined Group’s Board will comprise of:

  •  A 14-person Board drawing on expertise and experience of Flutter and TSG
  • Gary McGann, currently Chair of Flutter, will assume the role of Chair of the Combined Group
  • Divyesh (Dave) Gadhia, currently Executive Chairman of TSG, will assume the role of Deputy Chair of the Combined Group
  • Peter Jackson, currently CEO of Flutter, will assume the role of CEO of the Combined Group
  • Jonathan Hill, currently CFO of Flutter, will assume the role of CFO of the Combined Group
  • Rafi Ashkenazi, currently CEO of TSG, will assume the role of COO of the Combined Group  In addition, nine non-executive directors comprising five nominated by Flutter, three nominated by TSG and the appointment of Richard Flint, former CEO of Sky Betting and Gaming.