Phase 1 “unconditionally cleared”
Flutter Entertainment, the owner of Paddy Power Betfair, has been given the green light for an all-share combination with The Stars Group, the owner of PokerStars and Sky Bet, worth £10bn ($12.36bn).
Although the merger was announced in October last year, in February a review was started by the UK Competition and Markets Authority (CMA).
allows the merger to proceed pending approval by shareholders and the remaining phase 2 assessment
Today the CMA has “unconditionally cleared” the phase 1 review set out under the Enterprise Act 2002. This allows the merger to proceed pending approval by shareholders and the remaining phase 2 assessment.
In terms of online gambling verticals, the merger could put the group ahead as a market leader.
Speaking after the announcement, Flutter Entertainment CEO Peter Jackson, said that they will continue to work with other international regulatory authorities to gain the last of their outstanding approvals.
Jackson added: “This morning’s announcement marks a further important milestone in the process towards completion of our proposed combination with The Stars Group.”
Key focus was on favorable odds
The CMA decided to launch an investigation following concerns that customers may have receive less favorable odds and promotions if the merger went ahead, due to the current competitors in the UK market.
This would put the operator against the likes of Bet365, William Hill, and GVC Ladbrokes/Coral. However, this was not found to be the case.
In its statement the CMA said: “While the merging companies complete closely, they are among a close number of competitors, and the merger will not worsen the offering to people who choose to bet online.”
The CMA will now move on to phase 2 of its assessment.
Completion due in the second quarter of 2020
With the final bits of regulation to tidy up and a crucial vote from the shareholders, the operators do not expect to complete the merger until the second quarter of 2020. They have estimated that the all-share combination could achieve around £140m ($173m) of cost synergies as a result of the £10bn ($12.36bn) purchase.
all-share combination could achieve around £140m ($173m) of cost synergies
Also in their sights will be the U.S. online betting market, which is flourishing now that states have started to relax their strict betting laws. With tighter regulation on the cards in the UK, this could prove to be a lucrative move.
However, there are still a few bumps in the road left ahead, not least passing phase 2 of the investigation and tackling other regulators, whose verdict may be delayed due to the coronavirus outbreak.