Flutter Entertainment Acquires The Stars Group
In stunning news this morning, The Stars Group, owner of PokerStars, announced that it has agreed to be acquired by Flutter Entertainment plc. Flutter Entertainment is the parent company of PaddyPower, Betfair, FanDuel, Adjarabet, Sportsbet, and TVG.
A new behemoth is formed
It is an all-share deal, with shareholders of The Stars Group receiving .2253 new Flutter shares in exchange for each share they own in The Stars Group. Flutter will control the new company with 54.64 percent ownership, while The Stars Group shareholders will own 45.36 percent.
A name for the new company has not been announced. Right now, it is only being called the “Combined Group.”
The headquarters of the company will be in Dublin, Ireland, current home of Flutter Entertainment. The Stars Group has been headquartered in Toronto, Ontario, Canada. The PokerStars offices are in the Isle of Man, but the company recently warned its employees of upcoming layoffs. It is unknown if they are related to the acquisition, but the timing is certainly suspicious.
Shares of both companies are soaring on the news. The Stars Group (TSG) is up 44.94 percent in pre-market trading. It closed up 2.20 percent on Tuesday at $15.31 per share and two hours before markets open in North America, it is sitting at $22.19.
Shares of Flutter are up more than 17 percent on the London Stock Exchange.
Combined annual revenues for the new company would be £3.8 billion ($4.7 billion). That makes the Flutter/Stars Group giant the largest gambling company in the world.
Flutter expands globally
Flutter cited the following as a “four-pillar growth strategy” for acquiring The Stars Group:
• Help the Combined Group to maximise profitable growth in its core markets of the UK, Ireland and Australia
• Provide the platform and capabilities to accelerate growth across international markets
• Attain new podium positions in Spain, Italy and Germany and provide a highly regarded customer proposition to approximately 4 million Active Customers in more than 100 international markets
• Ideally position the Combined Group to pursue the US opportunity through a leading combination of brands, media reach and product offering
The last point is likely a significant one. Though the online poker market in the United States has been extremely slow to develop, the sports betting market has exploded in the past year after the Supreme Court overturned PASPA. Thirteen states now have legal sports betting industries up and running with a number of others have already legalized it or working on bills. The Stars Group has made deals with a number of companies to expand its U.S. sports betting footprint and offerings, including FOX and Penn National Gaming.
Peter Jackson, the CEO of Flutter, and Jonathan Hill, the CFO of Flutter, will take the same positions with the new company. Rafi Ashkenazi, the CEO of The Stars Group, will be the COO.
“This exciting combination will allow us to enhance and accelerate our existing strategy,” said Ashkenazi in a press release. “In recent years, we have transformed TSG from a single product operator in poker to a diverse global leader with multiple product offerings across poker, gaming, and sports betting. The combination with Flutter will further enhance our company’s core strengths, and position us strongly for the future in this rapidly evolving industry.”