Under the agreement, which would create the largest online betting and gaming operator globally, Flutter would exchange 0.2253 new shares in exchange for each TSG share, with Flutter shareholders owning approximately 54.64% of shares in the combined business and TSG shareholders 45.36%.
Flutter and TSG said that the merger would deliver substantial value creation for shareholders from pre-tax cost synergies of £140m per year, as well as potential revenue cross-sell in international markets and lower finance costs.
The two operators also expect the combination to deliver a post-tax return on invested capital that exceeds Flutter’s cost of capital by the end of the third full financial year post completion. Strong free cash flow generation is also expected as a result of the deal.
The combined business would have a diversified geographical footprint and by offer sports betting, poker, casino, fantasy sports and free-to-play games, a wide product range.
Flutter chief executive Peter Jackson, who would assume the same role at the combined business, 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 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,” he added.
TSG chief executive, Rafi Ashkenazi, who will become chief operating officer of the new company, stated: “This exciting combination will allow us to enhance and accelerate our existing strategy. In recent years, we have transformed TSG from a single product operator in poker, to a diverse global leader with multiple product offerings across poker, gaming and sports betting.”
“The combination with Flutter will further enhance our company’s core strengths, and position us strongly for the future in this rapidly evolving industry. I’m delighted to be joining the board of the combined group and to serve as its COO,” Ashkenazi added.
The merger remains subject to various conditions, including approval of Flutter and TSG Shareholder. This is not expected to happen until the second quarter of 2020, the deal requiring the support of at least 66% of TSG shareholders in order to go ahead.
Should the deal gain all of the necessary approvals, Flutter and TSG said they hope to complete the deal during the second or third quarter of next year.
Source: GMB / iGaming Business
