Paddy Power and PokerStars firms press ahead with £10bn merger

THE owners of Paddy Power and PokerStars will push on with their £10 billion mega-merger as they took “prudent” steps to weather the coronavirus storm by suspending future dividends.

Flutter Entertainment, owner of Paddy and Betfair, agreed to merge with Canada’s Stars Group last year but widespread sporting fixture cancellations have led to turmoil in the sports betting industry.

Flutter chief executive Peter Jackson said he was “more convinced than ever” about the merits of the merger because it will help diversify the business. The enlarged group will have more exposure to online poker and casino, which are largely unaffected by the lockdown.

To deal with the crisis, the combined group will suspend dividends payments for 2020 and Flutter will pay 2019 dividends in shares rather than cash.

The group has also obtained £1.3 billion more of debt funding from banks and lenders to refinance existing debt.

This will mean debt levels will be higher than expected after the merger . The company said the long-term target to cut debt was unchanged.

Analysts at Jefferies said cutting the payment was a “prudent step...to ensure more rapid de-leveraging”.