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Will Flutter Entertainment Be Waving Paddy Power Goodbye?
By Shane Addinall Oct 25, 2019 IndustryAs Flutter Entertainment and Stars Group stake their £11 billion merger on the burgeoning US sports betting market will they sacrifice Paddy Power to appease the market dominance concerns of the UK Competition and Markets Authority (CMA)?Flutter Entertainment, the parent company behind brands such as Paddy Power and Betfair, is set to merge with The Stars Group (consisting of brands such as Sky Betting, PokerStars and Full Tilt among others).
On paper, this deal is a no-brainer with the new mega-corporation reportedly being worth in the region of £11 billion, with an active player base in excess of 400 million users. This would truly set them apart as the industry’s most formidable gambling services provider.
✓When Is Big Too Big?
Despite their objective being US market share growth, the merger could attract resistance from UK regulators as the new group would control more than 40% of the current UK gambling and betting market.
The current threshold for market dominance is around 25%, this new group far supersedes that. This will likely see the UK Competition and Markets Authority (CMA) raising a red flag which could be a major stumbling block to the proceedings
Looking at some of the financial comparisons, the merger would see the newly empowered Flutter-Stars entity outstripping competitors such as Bet365 and GVC Holdings in terms of revenue by 50% and 100% respectively.
✓Time To Say Bye-Bye?
The focus of the new Flutter-Stars group will be primarily dedicated to growth and expansion in the burgeoning US market, where the Stars brands are both well-established and showing positive growth.
Given that the only way to appease the regulator concerns over the size of the new group is to sell off several properties this will most likely see Flutter Entertainment putting Paddy Power on the auction block.
✓Let’s Go 2020!
The way forward is not perfectly clear as the deal will only be finalised in 2020, and that does not consider any legal hurdles which may need to be overcome. However, should Paddy Power be sold to allow the new group to flourish lunch at the local pub might become an awkward affair seeing as both entities will be headquartered in Dublin.
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