UK’s CMA to investigate Flutter-Stars mega-merger

The UK’s Competition and Markets Authority (CMA) has announced that it is to investigate the proposed mega-merger between Flutter Entertainment and The Stars Group (TSG).

In October last year, Flutter, the parent company of Paddy Power Betfair, agreed a deal to acquire all shares in TSG and merge with the PokerStars operator to form a combined business with annual revenue of £3.8bn (€4.5bn/$4.9bn).

At the time, Flutter said the agreement would create the largest online betting and gaming operator in the world, with the deal set to see Flutter shareholders own approximately 54.64% of shares in the business, with TSG shareholders having 45.36%.

Board members at Flutter and TSG assured stakeholders that the merger would pass any competition-related hurdles, but the CMA has now stepped in to probe the deal.

The CMA said it will consider whether the merger would result in a “substantial lessening of competition within any market or markets in the UK”. Any parties interested in the deal are invited to submit comments by 18 February.

The merger also remains subject to various other closing conditions, including the approval of both Flutter and TSG shareholders, which is not expected until the second quarter of this year. The deal would require the support of at least 66% of TSG shareholders in order to proceed.

Other closing conditions include approval from the FCA, London Stock Exchange and Euronext Dublin, as well as the satisfaction of various merger controls, foreign investment and gaming-related approvals in the UK, Ireland, Australia, the US and Canada.

Should the deal gain all necessary approvals, Flutter and TSG said they hope to complete the deal during the second or third quarter of 2020.