Emerging Tech, Data & Media

FanDuel owners acquire Stars Group in US$12.3bn deal

All share takeover creates group with US$4.6bn revenue potential.

by Tom Bassam

FanDuel owners acquire Stars Group in US$12.3bn deal

Flutter Entertainment, the owners of FanDuel and Paddy Power, has confirmed it is acquiring the Stars Group (TSG), which added Sky Bet to its portfolio in 2018, in an all-share deal that creates a new entity worth US$12.3 billion.

Flutter, the UK and Ireland-based firm that recently rebranded from Paddy Power Betfair, would own approximately 54.64 per cent, while shareholders of the Canada-based Stars Group get 45.36 per cent of the new group. The deal also connects FanDuel with New Fox, which owns a minority stake in TSG and recently launched its own betting app, Fox Bet.

However, the cross-border deal will have a number of regulatory hurdles to clear authorities in the UK, Ireland, Australia, the US and Canada before being signed off. A high UK market share could draw attention from the Competition and Markets Authority.

The new group’s revenue would have been US$4.675 billion in 2018, with a combined 13 million customers across more than 100 territories, making it the largest global gambling firm by income and one of the biggest by users.

The two companies said the deal would help give them a stronger position in the burgeoning sports betting market in the US. FanDuel holds betting partnerships with Major League Baseball (MLB), the National Basketball Association (NBA) and the National Hockey League (NHL), as well as a daily fantasy deal with the National Football League (NFL).

Flutter's chief executive Peter Jackson will retain that role in the enlarged group, while Stars Group chief executive Rafi Ashkenazi will become chief operating officer. Flutter chairman Gary McGann will chair the group. Former Sky Bet chief executive and executive chairman Richard Flint comes in as a non-executive director of the new group.

Jackson said: "The combination represents a great opportunity to deliver a step change in our presence in international markets and ensure we are ideally positioned to take advantage of the exciting opportunity in the US through a media relationship with Fox Sports as well as our development of US sports betting through Flutter’s FanDuel and TSG’s Fox Bet brands. We are committed to these two high-quality brands to drive the growth of the combined group in the US.

"The combination will turbo-charge our existing four-pillar strategy and provide world-class capabilities across sports betting, gaming, daily fantasy sports and poker, as well as greater geographical and product diversification.

"We believe the combination of Flutter and TSG will deliver substantial value for shareholders. We will have an exceptional portfolio of leading recreational brands and best-in-class products on industry-leading technology platforms."

The combined group will be headquartered in Dublin, with a premium listing on the London Stock Exchange and a secondary listing on Euronext Dublin.

According to the Racing Post, the approval of Flutter and TSG shareholders is expected to be sought in the second quarter of 2020. The two companies added that completion is expected to occur during the second or third quarter of 2020.