Assuming the deal reaches completion, it will be the third biggest transaction ever in the casino and gaming space globally, per the PitchBook Platform. The deal is topped only by Caesar Entertainment's $27.6 billion PE buyout in 2008 and Paddy Power's own 2016 acquisition of Betfair for some $10 billion that preceded its rebranding to Flutter. However, that ranking could change if Eldorado Resorts completes its $17.3 billion acquisition of Caesars, which was announced earlier this year.
The all-share deal will see Flutter offer around 0.23 new shares in exchange for each share in Toronto-listed Stars. The reported valuation will put the company at a 40% premium to Stars' closing price on Tuesday, per Bloomberg. Using the same prices, the companies' combined worth will be around $11.7 billion. The new group—which will be headquartered in Dublin—would have joint annual revenues of £3.8 billion (around $4.7 billion) in 2018, making it the largest online betting and gaming operator in the world.
Flutter's deal is the latest maneuver in an ongoing race among British bookmakers looking to capitalize on America's newly liberated sports-betting market. In May 2018, the US Supreme Court struck down a 1992 federal law—the Professional and Amateur Sports Protection Act (PASPA)—that stopped states from regulating sports betting if they hadn't already done so.
With the repeal of PASPA, states can now start their own regulated sports betting. This has opened new frontiers to betting shops who have had years to establish themselves in the UK and Ireland where sports betting has long been tradition. The Stars Group, which just partnered with Fox Sports to launch Fox Bet in New Jersey and Pennsylvania, and Fox Sports Super 6 nationwide, will significantly expand Flutter's US footprint. The Irish company's first foray into the US market came early last year, when—prior to its renaming—it acquired New York-based FanDuel, a daily fantasy sports provider and bookmaker, for a reported price tag of $465 million.
While US market dominance may look like a dead cert for the gaming giant, it still must overcome some significant regulatory hurdles at home. If a merger creates an entity that has a UK turnover exceeding either £70 million or 25% market share—as it seems to be with Flutter—the UK's Competition and Markets Authority may open up an investigation. After that, all bets are off.
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