Final details are still being worked out, but the companies said the deal had “compelling strategic logic” and boosted their market position.
shareholders would own 52% of the combined business, with investors owning the remaining 48%.
The combined business would have annual revenues of some £1.1bn.
Shares in soared 18% to £30.72 on Wednesday, while jumped more than 15% in Dublin.
and have agreed to merge to form one of the world’s biggest online betting and gaming companies, in the latest move to consolidate the gambling industry.
Under the terms of the deal,shareholders would own 52% of the company and Betfair shareholders would own 48%.
Betfair’s chief executive, Breon Corcoran, who joined from Paddy Power three years ago, will run the company. Paddy Power’s chief executive, Andy McCue, would be chief operating officer. Gary McGann, chairman of Paddy Power, would chair the combined company.
The deal would combine Paddy Power, the aggressive Irish bookmaker that courts controversy and operates on UK and Irish high streets and online, with Betfair’s online gambling exchange, which lets punters bet against each other in real time instead of accepting bookies’ odds.
The combined company would have revenues of more than £1.1bn, greater scale to compete for customers and brands that complement each other, they said. It would also have opportunities to expand in Europe, the US and Australia and to cut costs.
Paddy Power and Betfair said: “The combination has compelling strategic logic and represents an attractive opportunity for both companies to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.”
The companies announced the deal two months afterand Gala Coralrevealed plans to create the UK’s biggest bookmaker. In other strategic moves, online gaming group 888 has agreed to buy its rival .party but GVC Holding, owner of , is trying to hijack the deal to buy .
The flurry of dealmaking in the gambling sector is the result of new taxes on online gambling around the world and the need to invest in marketing and technology to compete in the fast-changing world of internet betting.
Corcoran has been credited with turning around the fortunes of Betfair. Since taking the helm, he has increased UK customer numbers by 250% and Betfair’s share value has risen from about £750m to £2.4bn. The company has developed an online conventional bookmaking service to complement the betting exchange product.