Stars Group and Flutter Merger Enters First Phase of CMA Investigation

Feb 06

When two big companies like Stars Group and Flutter decide to merge, the CMA or Competition and Markets Authority, launches an investigation into such a merger. The reason for this is to regulate competition and to prevent the abuse of dominant positions by such entities. Some mergers are said to possibly restrict competition. The CMA makes sure that this does not happen by investigating any mergers within a span of 24 weeks after which its findings are published in a report.

After Stars Group and Flutter announced their merger in 2018, with the scheduled completion of such a merger in 2020, the CMA has launched its initial investigations into this partnership. This merger will only come to fruition when there are no interruptions and disruption to the completion of such a deal. Close scrutiny is being done due to the possibility that such a coupling will substantially lessen the competition in the UK for goods and services.

At the closing of the deal in 2018, the cost of acquiring Stars Group by Flutter was at £11 billion. It was also expected that the pairing would generate the new consolidated company a pro forma revenue of £3.7 billion in 2018. In 2019, both companies posted large individual revenues that totaled US $ 5.2 billion. This is attributed to the expansion of Flutter into the US market and because of the coming merger with Stars Group.

Stars Group announced that their 2019 total revenue has risen by 25% while Flutter states that their increase is at 14%. Since both show numbers going up instead of down, it basically indicates that this is going to be a profitable merger. Only time, and the CMA, will tell if such a partnership will come to fruition within the year.