Flutter Entertainment Plc, the owner behind popular betting brands Paddy Power and Betfair have struck a deal to buy Toronto-based The Stars Group Inc.
The $6bn (€5.5bn) all-share transaction aims to take advantage of opportunities in the USA following the Supreme Court’s decision to legalise sports betting, Bloomberg reports.
Just under half of Flutter’s revenue stems from the United Kingdom (UK), which has more rigid rules on fixed-odds betting terminals. The UK also charges higher tax rates for online betting, which critics complain have caused turmoil in the industry.
Bloomberg reports that the newly opened US market for sports betting has caused a land grab, while Flutter is “turbocharging” its effort through the purchase of Ontario-based Stars Group. The new group’s UK presence on the market however has caused concerns over competition.
“Consolidation in the gaming sector continues as the sector continues to suffer from greater regulatory restrictions, more taxes, and the need to be seen to take the issue of problem gambling seriously,” analysts at Kepler Cheuvreux said in a research note, as reported by Bloomberg. “The combination of both companies could trigger combined market shares exceeding 30%, which would result in an in-depth investigation in the U.K.”
Flutter, based in Dublin, has a presence in the US market through its fantasy sports betting site FanDuel. Canada’s The Stars Group inc has in the meantime agreed to a partnership with American casino operator Eldorado Resorts Inc.
Buying TSG will “ensure we are ideally positioned to take advantage of the exciting opportunity in the U.S.,” Flutter Chief Executive Officer Peter Jackson said in a statement. “The combination represents a great opportunity to deliver a step change in our presence in international markets.”
Flutter has reportedly offered 0.2253 of its shares in exchange for each share in The Stars Group, the companies said in a joint statement. This values the deal at around €5.5bn, with shares being offered at €19.3 each (£17.2), according to Bloomberg’s calculations.
Flutter’s shares were up 15.5% at 10:42 a.m.