Bookmakers Paddy Power And Betfair Agree Merger

Paddy Power and Betfair have announced a merger as the deal frenzy in the betting and gaming sphere intensifies.

The agreement in principle comes weeks after Coral and Ladbrokes agreed a tie-up , and would create one of the world's largest betting and gaming companies.

It will command over £1.1bn of revenue, with the firms believing their combined scale will leave it better placed to compete in new and existing markets.

The combined group would be worth £5.8bn at current market prices.

Paddy Power and Betfair shareholders would own 52% and 48% respectively of the company.

Betfair's CEO, Breon Corcoran, and CFO, Alex Gersh, will keep their positions, with Paddy Power's chairman, Gary McGann, overseeing the board.

Mr Corcoran is no stranger to Paddy Power's operations having been its chief operating officer for two years before becoming Betfair's boss three years ago.

Betfair and Paddy Power have seen their share prices rise 142% and 53% respectively over the last 12 months.

In contrast, shares in Ladbrokes have fallen 24% over the same period.

Ladbrokes has come under increasing investor criticism for its online offering, an area where Paddy Power has gained market share.

Betfair and Paddy Power also issued financial results today.

Betfair's first-quarter revenues increased 15%, while Paddy Power's operating profit grew 33% to €80m (£58m) for the first six months of the year.

Shares in both of the companies went higher in early trading following the merger announcement: Betfair was up 18%, while Paddy Power rose 14%.

Investors in Ladbrokes seem worried by the new, bigger competitor - its shares were 5% lower in early exchanges.

Betfair was founded in 2000 by Edward Wray and Andrew Black who remain significant shareholders - with stakes worth £279m and £84m respectively.