October 31, 2019 | Consumer Discretionary | North America | Ended

The Stars Group / Flutter Entertainment: Global Antitrust and Notable Deal-Related Risks

The TSG / Flutter merger will create the world’s largest online sports betting and gaming operator, and follows a trend of consolidation in the gambling industry, particularly among UK public companies. The cross-border deal was agreed upon due to the companies’ needs to diversify geographies, meaningful accretion, strong synergies and lucrative cross-selling opportunities. To achieve these benefits, the parties must overcome complex antitrust hurdles, in addition to regulatory control and foreign investment approvals. In this report, we focus on the risks to deal completion, which are predominantly competition-related in the UK and Australia - the world’s two largest online gaming markets. We look at how required divestitures weigh against the primary rationale for the deal – cross-selling in the US – and explore the feasibility of additional deal-related risks, such as an unsolicited bid for Flutter and UK-specific regulatory, public interest and political considerations.

Contents 1. Key Merger Rationale: Cross-Selling In the US 2. Antitrust Scrutiny in the UK 3. Antitrust Scrutiny in Australia 4. UK Specific Risks: Changing Regulations, Pubic Interest, Brexit 5. Bid for the Acquirer: Can Flutter Receive a Takeover Approach? 6. TSG and Flutter Break Price Analysis 7. Expected Outcomes, Timing and Risk Arbitrage Trading Views Appendix A. Canadian Takeover Regulation (42 pages)

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