Betfair and Paddy Power agree on merger

(ShareCast News) - Betting companies Paddy Power and Betfair have reached an agreement on a £5bn all-share merger.The merged entity will be called Paddy Power Betfair and Paddy Power shareholders will own 52% of the group, while Betfair shareholders will own the rest, if both sets of shareholders approve the deal.Betfair shareholders will be entitled to receive 0.4254 Paddy Power Betfair shares in exchange for each Betfair share. In addition, immediately prior to completion, Paddy Power shareholders will receive a special dividend of €80m.Gary McGann, chairman of Paddy Power, will become the chairman of the merged group, while Betfair's chief executive officer, Breon Corcoran will become CEO and executive director.Alex Gersh, chief financial officer of Betfair, will become CFO and an executive director.The company will be headquartered in Dublin and will have a premium listing on the London Stock Exchange and a secondary listing on the Irish Stock Exchange.The board will target a payout ratio of around 50% of the combined group's profit after tax and Betfair said the combined group will be able to achieve recurring annual pre-tax cost synergies of around £50m.