A leading investor activist group is urging Betfair shareholders to back the company's planned €8 billion merger with rival Paddy Power at a meeting next week.
The pair plan to create one of the world’s biggest gambling groups, with revenues of between €1.5 billion and €2 billion a year and a stock market value of about €8 billion, by merging early next year.
Shareholder activist Pensions & Investment Research Consultants is recommending that Betfair’s equity holders vote in favour of the deal at an extraordinary general meeting next Monday.
The consultants say that Betfair’s circular to shareholders and the balance of non-executive directors on its board indicate that the decision to merge with Paddy Power was “taken with appropriate independence and objectivity”.
Paddy Power shareholders will also vote on the proposed deal at an extraordinary general meeting in the company’s Dublin HQ on Monday.
Pensions & Investment Research Consultants is an influential organisation that scrutinises companies’ corporate governance, board composition and financial reporting and acts as an adviser to large numbers of institutional shareholders.
The organisation frequently recommends that investors vote against company resolutions where it fears that boards are not sufficiently independent or have failed to follow best practice. It is also known for opposing executive bonuses and share option schemes.
Paddy Power and Betfair announced their merger plans in August. Both sides are billing the deal as a merger of equals that will save money and create a group with a diverse range of businesses in Europe, the US and Australia.
Under the terms of the all- share deal, Paddy Power shareholders will own 52 per cent of the newly enlarged group and Betfair investors will receive 48 per cent.
Both brands will remain after the deal is completed.
Betfair chief executive Breon Corcoran will take the helm at the new group and Paddy Power chief executive Andy McCue will become its chief operating officer. Its headquarters will be in Dublin and it will have its primary stock market listing in London.
