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Caledonia a key player in major gambling merger

Tue, Oct 8, 11:31am by William Brown

Caledonia (Private) Investments have been involved in a major global online gambling merger that is set to have a major impact on the Australian wagering industry.

Chief Investment Officers Will Vicars and Mike Messara issued a letter to clients late last week, informing them that they had been working for yours to see the combination of London listed entity Flutter Entertainment and Canada’s The Stars Group.

Flutter Entertainment is known as owner of bookmaking giants Paddy Power and Betfair, while The Stars Group own an 80% stake in Australian bookmaker BetEasy, according to The Financial Review.

According to the release by the two entities on October 2, following completion of the combination, Flutter shareholders would own approximately 54.64% and TSG shareholders would own approximately 45.36% of the share capital of the combined group.

The joint entity views that the combined group will be well diversified from both a geographical and product offering perspective. It’s product offering will span across sports betting, poker, casino, fantasy sports and free-to-play games and the combination will help to maximise profitable growth in its core markets of the UK, Ireland and Australia.

International markets a key

In addition, the merger will provide the platform and capabilities to accelerate growth across international markets, attain new podium positions in Spain, Italy and Germany and provide a highly regarded customer proposition to approximately 4 million Active Customers in more than 100 international markets.

It will also assist the group in pursuing the United States market through their leading combination of brands, media reach and product offering

The deal would create the clear number 1 entity in online gambling internationally, with the new entity accounting for 26% of the Australian wagering markets’ net revenue.

Caledonia last reported position of The Stars Group was at 19.7%, worth $C1.57 billion ($1.74 billion), held mostly via its co-investment fund.

Caledonia (Private) Investments chief investment officers Will Vicars and Mike Messara stated in its letter to clients last week that “over the last four years, we have worked tirelessly behind the scenes to help realize our dream for this industry – helping nurture the Stars Group acquisition of Sky Bet, then the joint venture between Stars Group and Fox Corporation to form FOX Bet and now the merger of Stars Group and Flutter.”

“We believe this merger brings together the very best brands in online gambling – FOX Bet and FanDuel in the US, SkyBet and Paddy Power in the UK, Sportsbet in Australia, and BetFair and PokerStars which are global in scale.

“It is a dream come true for us to see these amazing brands combined into the same entity…we see ourselves as strategic partners to the management team of our companies, and sometimes we can help them pursue mergers and acquisitions where the industrial logic is so compelling.”

In addition, Caledonia owns shares in Flutter with Bloomberg records showing it had about 1 million shares or 1.5 per cent of the company as August.

Should the deal proceed, Caledonia would have approximately a 10% stake in the combined entity upon finalisation. Caledonia have pre-committed to vote its shares in favour of the transaction.

The combined Flutter / The Stars Group entity will be incorporated, headquartered and domiciled in Dublin, Ireland. It will have a premium listing on the London Stock Exchange and a secondary listing on Euronext Dublin.

Finalisation of the deal is set to take place next year with the approval of Flutter and TSG Shareholders expected to be sought in the second quarter of 2020.

Completion of the merger is expected to occur during the second or third quarter of 2020.


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