UK CMA approves Flutter-Stars merger

The UK Competitions and Markets Authority (CMA) has given the green light for the merger between The Stars Group (TSG) and Flutter Entertainment to go ahead, clearing ‘phase 1′ of its competition review.

Last October, Flutter and TSG agreed to terms on an all-share combination, as the two companies set about creating the outright global market leader operating across all online gambling verticals. The CMA confirmed today that this combination has been ‘unconditionally cleared’ following the CMA’s Phase 1 review under the Enterprise Act 2002.

Welcoming the announcement, Peter Jackson, Chief Executive, said: “This morning’s announcement from the CMA marks a further important milestone in the process towards completion of our proposed combination with The Stars Group.

“We continue to work with the remaining international regulatory authorities to obtain the last of the outstanding approvals. Separately last week we published the necessary documentation ahead of the shareholder votes in April and we continue to make good progress in our post-completion planning.”

The proposed transaction remains subject to approval by Flutter shareholders at its extraordinary general meeting on 21 April 2020 and by The Stars Group shareholders on 24 April 2020.

The merger is also awaiting the approval from ‘a small number of other regulatory bodies, some of whom have indicated that their usual timeframes may be delayed by the current COVID-19 crisis’.

In a statement, TSG said: “The Stars Group and Flutter continue to work diligently towards completion of the Combination, which remains conditional upon, among other things, certain approvals by each of Flutter’s and The Stars Group’s shareholders, Ontario court approval of the plan of arrangement, certain approvals from the United Kingdom Financial Conduct Authority, London Stock Exchange and Euronext Dublin, and any remaining relevant merger control, foreign investment and gaming related approvals.”

The key focus of the CMA investigation was to identify whether, as a result of the deal, ‘customers who choose to place bets online could be offered less favourable odds, less generous promotions or poorer quality products, for example, as a result of reduced innovation in pricing or app experience’.

The CMA found that due to the high level of competition between betting operators, ‘the merger will not worsen the offering to people who choose to bet online’.

Under phase-1 of its evaluation, the CMA considered the impact of Flutter’s Paddy Power and Betfair properties combining with TSG’s Sky Bet asset, allowing for the merger to be sanctioned.

The Flutter-TSG combination will now be moved onto ‘phase 2’ of its assessment in which the CMA will give its determination on marketplace factors assessing the deal’s 40% take-up of UK online betting – significantly above the CMA’s 25% regulatory guidance.

Earlier this week, Flutter emphasised that its multi-billion pound merger with TSG remains on track, as the group plans to undertake several COVID-19 adjustments.

In its update, Flutter confirmed that it expects global COVID-19 disruptions will have an impact on the ‘financial profile of the combined group’. However, the operator group praised its M&A focus, stating that stronger cash generation, scale and combined synergies will help the business outride COVID-19 factors.