Paddy Power and Betfair are merging their operations in a deal that’s creating one of the largest gambling companies in the world.
Under the terms of the deal, Paddy Power would retain control of 52% of the newly formed company, while Betfair would control the remaining 48%. All told, the new Paddy Power Betfair group deal is worth a little over £5 billion ($5.64 USD) and is projected to generate around £1.1 billion ($1.24 billion) during its first year of operation.
So why would two well-established brands that both seem to be doing well on their own want to merge? According to statements made to the press by company officials, it’s all about scale.
Betfair CEO, Breon Corcoran (who will also act as CEO of the new company) described the logic behind the move as follows saying:
We fundamentally believe this industry is all about scale. By putting together two distinct but phenomenally strong brands, we’ll have a market leading position in the UK, Ireland, Australia and in the United States.
Paddy Power CFO Cormac McCarthy echoed those statements saying:
The scale and capability is unsurpassed and would leave us in a much better place to compete in our current markets, where competition is intense.
While there’s no word yet on how the deal impacts casino affiliates but investors were very happy with the new arrangement. Betfair stock rose 18% on news of the deal, while Paddy Power stock rose 17%.
Under terms of the deal, both brands are expected to retain elements of their original identities, so don’t think this means the end of Paddy Power’s controversial, but always interesting, advertising campaigns.