Flutter and TSG $18.3 Billion Mega Merger Completes

The mega merger between Flutter Entertainment and The Stars Group (TSG) completed on May 5. The newly formed company is the biggest gambling company in the world with a combined value of $18.3 billion.

More than 99% of Flutter shareholders voted in favour of the merger going ahead. Similar figures were posted when TSG shareholders cast their votes with 99.9% voting for. It is easy to see why investors were so keen to get the deal over the line.

The new company is a legitimate powerhouse. It now boasts of 13 million active customers across more than 100 international markets. Those customers generate a combined $6.92 billion, an astronomical sum of money.

Diversifying the company’s portfolio is another reason shareholders voted in favour of the mega merger. TSG has no retail revenue because its business is purely online. TSG generates a 35% of its revenue via poker, 32% from sports betting, and 30% from gaming. This complements Flutter who hardly generates any revenue via online poker, but 18% of its revenue via retail venues.

More About the Flutter and TSG Deal

No money is changing hands for this merger as it is an all-share deal. Flutter acquired all issued and outstanding common shares of TSG as part of the deal. TSG shareholders received 0.2253 Flutter shares for each TSG share they held.

The result is Flutter controlled shares owning 54.64% of the new company with TSG owning 45.36%

Peter Jackson is the CEO of Flutter. He issued a statement to the London Stock Exchange following the merger’s completion.

“The enlarged group brings together exceptional brands, products and businesses, a hugely talented and experienced team, and a diverse global presence. The strength of our combined portfolio of assets means that we approach the future with confidence in these uncertain times.”

Jackson also revealed plans for the combined groups many brands.

Paddy Power, Betfair, SGB, and Sportsbet continue to operate as individual brands in the short term. All U.S. operations are merging into one reporting unit with TSG’s international business forming another separate unit.

Flutter is merging TSG’s international operations with Paddy Power Betfair in the longer term. SBG will also become part of this group to form a new UK and Ireland division.

Does This Spell The End of TSG in Australia?

TSG has a presence in Australia via its BetEasy brand. Matthew Tripp launched BetEasy in 2014 before selling to Crown Resorts’ CrownBet in December 2017. TSG bought an 80% stake in BetEasy in the first quarter of 2018. It got it hands on the remaining 20% in December 2019.

BetEasy is being absorbed by Flutter-owned Sportsbet following the mega merger’s completion. Sportsbet outperformed BetEasy during the first quarter of this financial year so Flutter chose it to remain the new company’s sole presence in Australia.

“Flutter currently intends to pursue a single brand strategy for its Australian operation,” said a Sportsbet spokesperson. They added focussing on a single brand allows them to migrate quicker and refocus attention on customers.”

TSG as a company no longer exists on stock exchanges. It was unlisted from the Toronto Stock Exchange and Nasdaq Global Select Market following the completion.

What Does The Deal Mean For Customers?

The majority of customers are unlikely to notice any major changes. BetEasy customers should be seamlessly integrated into Sportsbet. This new company still generate plenty of revenue from its Australian operations.

Fifteen per cent of that aforementioned $6.92 billion of revenue stems from Australians. That equates to more than $1 billion.

We would expect Flutter to take several months to integrate its systems with TSG. There are likely to be job losses in the short term, but Australian punters will benefit in the long-term. A company the size of Flutter now has the clout to push for legislative changes. Perhaps it won’t be too long before they launch casino and online poker products Down Under?