Flutter commits to Ireland after Stars merger
Planned acquisition of Canadian firm by Paddy Power owner will create world's largest online gambling group
Ireland will remain the global headquarters for the €12bn gambling giant being created by Paddy Power owner Flutter Entertainment's takeover of the Toronto-based Stars Group.
The senior leadership team will remain based in Ireland following the deal, as will the head office.
The group traces its origins back to the 1988 merger of three relatively small Irish betting chains owned by Stewart Kenny, David Power and John Corcoran, to create the Paddy Power brand.
It has since grown dramatically and merged with Betfair to create Flutter. The latest all-share deal to buy Canada-based Stars will create a London-listed group likely to have a more than €12bn market capitalisation. Stars owns brands such as Sky Bet and Poker Stars.
It paid $4.7bn (€4.3bn) last year to buy Sky Betting & Gaming. Fox bought a 4.99pc stake in Stars earlier this year.
The enlarged group - which will see Rupert Murdoch's US-based Fox Sports have an interest - will eventually generate savings from its headcount, but chief financial officer Jonathan Hill insisted it was too early to provide details.
Flutter currently employs about 2,800 people in Ireland between its retail outlets and its corporate head office in Dublin.
About 60pc of the expected £140m (€157m) a year of synergies Flutter expects to generate from the acquisition will come from the UK and international markets, Mr Hill said.
"Naturally, there will be some savings in people over time," he told journalists yesterday as Flutter announced plans to create the world's biggest online gaming and betting group.
"It's way too early to say where that is and what those are precisely," he added.
Shares in Flutter soared more than 15pc by lunchtime in London, giving it a market capitalisation of just under £6.9bn.
Stars shares were 32pc higher in New York, as markets opened, giving it a market capitalisation of about $5.8bn.
Flutter shareholders will own 54.64pc of the new group. A big chunk of the savings that will be generated will be on the corporate side. Stars is listed on the Toronto and New York stock markets, and both those listings will be terminated. Lower procurement and interest costs are also anticipated.
Mr Hill said 20pc of synergies will likely derive from the corporate side of the bigger business, with 20pc being achieved in Australia. Estimated one-off costs associated with achieving those synergies in year three will be about £180m.
Flutter CEO Peter Jackson stressed that generating synergies is not the main goal of the deal, which is expected to be completed by the third quarter of next year.
"We see this combination as about driving growth into the business," he said. "We're not doing this for the cost synergies. Clearly, it's an important component, but it's not why we're doing this deal."
Mr Jackson will remain CEO of the enlarged group, while Mr Hill will be chief financial officer.
Flutter chairman Gary McGann will also retain his role. Stars CEO Rafi Ashkenazi will be chief operating officer.
The deal will create a global group that last year would have generated revenue of €4.2bn. Assuming regulatory approval, the group will have more than 13 million active customers.