Smart money on merger of Flutter and Stars Group succeeding

The merger of Paddy Power-owner Flutter Entertainment with the Stars Group is nearing the finish line or, at the very least, closing on the final few fences.

Shareholders in Toronto-based Stars Group voted by a 99.99 per cent majority to join forces with the Irish group to create a global gambling business with more than 10 million customers. Flutter investors backed the deal by a similar majority earlier this week.

The judge has not quite called the result yet. Regulators in Pennsylvania in the US and Australia must first give their approval. Decisions from both should take a few weeks more.

While nobody is trying to second guess the authorities in those jurisdictions, industry observers would be surprised if either regulator were to put any significant barriers in the way of the deal going ahead.

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Most expected the UK's Competition and Markets Authority (CMA) to subject the proposal to the most scrutiny. Skybet, which Stars Group owns, is a significant player there, where it competes with Paddy Power and Flutter's other big European business, betting exchange, Betfair.

The merged entity would bring those businesses, along with several online poker operations, under one roof in the UK. Nevertheless the CMA recently said that it was satisfied that there were enough companies offering online and other betting in the market to ensure competition would continue after the deal is done.

Given that outcome, sources believe there are good grounds for believing the authorities in Australia and Pennsylvania will pass it also. While it is no mean feat to get the deal this far, particularly given it was announced just six months ago, the hard work will only really begin after the transaction itself is completed.

Marrying the two organisations could save the enlarged entity around €160 million a year. Working out the nuts and bolts of this would be challenging at the best of times, but beginning that process with much of the world in some sort of coronavirus lockdown is going to be even tougher. Still, the smart money at this stage must be on the pair succeeding.