Paddy Power Betfair merger enters competition clearance phase
The proposed merger between Paddy Power and Betfair has been formally notified to the Irish Competition and Consumer Protection Commission (CCPC).
The planned €7.5bn merger - announced in August - has now entered a phase one probe at the CCPC. It said that the deadline for any parties wishing to make a submission in relation to the proposed merger is November 5.
The preliminary investigation typically only takes a few weeks, but depending on any concerns or issues the CCPC may have, it can become a more in-depth probe.
Betfair and Paddy Power have previously indicated that they hope the merger will be sealed by January.
The newly merged entity, which will be known as Paddy Power Betfair, will be headquartered in Dublin and will join the FTSE-100.
Paddy Power is currently headed by Andy McCue. He'll become chief operating officer of the combined group. Betfair chief executive Breon Corcoran will lead the new company while Paddy Power chairman Gary McGann will also be chairman of the enlarged group.
The combined annual revenues of Paddy Power and Betfair are about €1.7bn, with 80pc of that generated by online channels.
Last month, Davy Stockbrokers suggested that shares in Paddy Power were undervalued by about 30pc based on synergies it can achieve under the Betfair merger. Analysts at Davy indicated the shares could hit €129 apiece.
The analysts also believed that shares in Betfair could gain 30pc, and tipped the merged entity to be one of the best growth stocks in Europe.
Paddy Power and Betfair expect to incur £65m (€89m) in cash costs as they integrate their businesses over the next three years as part of their planned merger.
Paddy Power and Betfair executives said they expect to generate annual cost savings of about £50m (€69m) within three years of the merger being completed.
But generating those savings will probably result in job losses. Paddy Power employs over 5,000 people around the world, while Betfair has 1,900 employees.
Of Paddy Power's total employees, 2,600 are based in Ireland and 1,400 of those at its headquarters in south Dublin. Betfair also has an office in Dublin employing about 130 people.
Paddy Power and Betfair said last month that an initial study of possible synergies has highlighted the potential for savings in areas where there may be duplication across "general corporate overheads and facilities", and "by rationalising certain operational and support functions".
The combined business will operate in over 100 countries, including the UK, Ireland, Australia, Italy, Canada, Denmark and the US.
Paddy Power shareholders will own 52pc of the merged business,and they'll share a special €80m dividend prior to the merger completing.