LONDON (Alliance News) - Paddy Power PLC Tuesday said it has reached an agreement with Betfair Group PLC on the terms of a recommended all-share merger between the two companies.
The merged entity, to be called Paddy Power Betfair PLC, will result in Paddy Power shareholders owning 52% of the combined group, while Betfair shareholders will own 48%. Betfair shareholders will receive 0.4254 new Paddy Power Betfair shares in exchange for each Betfair share.
Paddy Power shareholders will also receive a special dividend of EUR80 million.
Paddy Power said that the boards of both companies believe that the combined group will be able to achieve annual pretax cost synergies of GBP50 million, which will be achieved in the third year following completion.
Following completion, Paddy Power Chairman Gary McGann will become chairman of the merged group, while Betfair Chief Executive Breon Corcoran will be CEO of the combined group. Andy McCue, CEO of Paddy Power, will fill the role of chief operating officer, while Betfair Chief Financial Officer Alex Gersh will continue to act as CFO.
Paddy Power added that both companies will retain their current dividend policies prior to completion, and following the merger will adopt a progressive dividend policy consistent with the merged group's enhanced growth strategy. Paddy Power said it expects that Paddy Power Betfair will target a payout ratio of around 50% of its profit after tax.
"The merger of Paddy Power and Betfair will create a company of world class capability and people who will deliver substantial up-front synergies and a platform for very exciting business expansion. The combination of Breon, Andy and their colleagues in this merger of equals comprises "the A team" in the business with the ambition to create a unique global player in a very dynamic industry," Paddy Power's McGann said.
"The merger of Paddy Power and Betfair will create one of the world's largest public online betting and gaming companies. The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands. Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value," Betfair Chairman Gerald Corbett added.
By Karolina Kaminska; karolinakaminska@alliancenews.com @KarolinaAllNews
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