Paddy Power and Betfair hold talks over £5bn merger
Betting firms Paddy Power and Betfair are set to merge in a £5bn tie-up to create one of the world's largest online gambling businesses as consolidation in the industry hots up.
The Irish chain and the online firm said talks were ongoing to finalise a deal, with the enlarged firm due to have combined revenues of £1.1bn and a "significant" presence in the UK and Ireland.
Paddy Power has eight betting shops in Northern Ireland.
They will continue to run separate brands after the merger, which would see Paddy Power shareholders own 52% of the combined business, with Betfair investors owning the remaining 48%.
The firms said: "The possible merger would create one of the world's largest public online betting and gaming companies by revenue with enlarged scale, capability and distinctive and complementary brands."
Paddy Power runs 336 shops in the UK and 252 stores in Ireland, while Betfair runs an online betting exchange.
Just last month, rivals Ladbrokes and Gala Coral agreed a merger to create a £2.3bn gambling giant, which is expected to overtake the UK's biggest bookmaker William Hill.
The move will bring together 2,100 shops from Ladbrokes and 1,845 from Coral, although the deal is conditional on approval from the Competition and Markets Authority.
That deal would see both firms relinquishing around 600 branches in total to stay within CMA rules - prompting Co Armagh betting tycoon John Boyle of Boylesports to say he may step in to buy the off-loaded branches.
Also, the owner of online gaming firm Sportingbet GVC Holdings and rival 888 Holdings are currently in a £1bn bid battle to buy Bwin.party, which has some of the world's biggest online gaming brands - including partypoker, partycasino and FoxyBingo.
A combination of new taxes on online gambling around the world and the need to invest in marketing and technology is behind the consolidation in the industry.
Both Paddy Power and Betfair posted rising profits yesterday and both have established market positions.
Brokers at Peel Hunt said both Paddy Power and Betfair approached the merger from "a position of strength".
Shares in Paddy Power and Betfair jumped 18% and 22% respectively on the announcement.
Betfair chief executive Breon Corcoran is set to become head of the enlarged company. Previously Mr Corcoran had been chief operating officer at Paddy Power until he joined Betfair three years ago.
The firms have also identified attractive international growth opportunities across continental Europe, the US and Australia.
The firms added that if the merger is completed, Paddy Power shareholders would receive a special dividend of €80m (£58m).
Paddy Power was founded in 1988 by the merger of three existing Irish bookmakers and it has become well known for its irreverent marketing style. Its rapid growth in recent years has seen it build more than 350 betting shops in Ireland and the UK.