Mega Merger Between Flutter and The Stars Group Almost Complete

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The sports betting world is one step closer to its version of a “service provider Goliath” with shareholders of both Flutter Entertainment and The Stars Group each approving a merger that would create the world’s biggest online betting company. Shareholders from both companies left little doubt about their feelings to create a global behemoth - both groups voted over 99% in favor of the special resolution approving the Arrangement.

With most of the regulatory hurdles cleared, including approval in all countries that both companies have a presence, it is expected that both sides will complete the deal by the second half of 2020, assuming the current coronavirus issues we are in the midst of doesn't somehow derail the process. The move could make it difficult for other providers to gain market share in participating US states and signal the birth of a “Walmart of the legal betting industry.”

 

The long-ish road

Both Flutter and The Stars Group have entities and are present in a few countries around the world. Hoping to maintain that presence, regulatory clearance had to be sought by those countries - the last being the perceived biggest hurdle, the UK. After some study and debate, regulators in the UK finally signed off last week as the final major hurdle toward the merger.

With the UK giving the partnership the go-ahead, with Canada, Austria, Germany and the United States and Australia giving their blessing and with all shareholders having had their say, all that is left is a few smaller regulators to give the green light before the deal is official. COVID-19 could still stand in the way of the smaller regulators but the companys’ officials have no fears of the pandemic jeopardizing the merger.

There was a school of thought out there that one, or both entities involved in the deal would have to sell off some of their brands in order for the merger to go down. That, fortunately for Flutter and The Stars Group didn't materialize. It was looked at and ruled that both companies could keep their current assets and that other competition wouldn't be drowned out in the markers where Flutter/The Stars Group resided.

 

How big will the new company be?

All-in-all, the final hurdles signal the culmination of a what is said to be a $6 billion transaction. It is expected that once up-and-fully-running, the merger will have created a massive $11 billion dollar gaming conglomerate with each of the two entities bringing something to the table. Combined, it is estimated that both companies are worth $20 billion, that they employ around 12,500 people and generate an estimated $4 billion in net revenues during “normal” times.

Flutter Entertainment gains the majority of its revenues come from online sports betting which has taken a serious hit during this time of sports shutdown globally. The Stars Group makes the majority of its gaming revenues from online casino and poker games which is thriving during these strange times we all live in right now. Together, both companies seem to have every aspect of the legal online sports betting industry covered.

 

Impact of the US market

The growing US market was seen as a catalyst for the massive merger. New markets are slated to open in the US once the coronavirus has passed and those states with current legal sports betting platforms are already looking to expand. The Stars Group and Flutter Entertainment have essentially absorbed one of each’s big competitors for market share in the US and will give both a competitive advantage against the other big players vying for a piece of the legal gambling pie.

Two massive companies becoming one. That is the reality of the merger between The Stars Group and Flutter Entertainment. It will either bring out the best in the competition, force other mega-mergers, or see smaller players fade away.

Could this move be the first of many on the global sports betting landscape? It should be interesting.

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