Betfair, Paddy Power in merger talks

Betfair, the British exchange-wagering operator and owner of TVG and HRTV, is in formal discussions to merge with the Irish bookmaker Paddy Power, the two companies said on Wednesday.

The proposed merger would create one of the largest betting companies in the world, with Betfair’s market-leading exchange-wagering site combined with Paddy Power’s network of bricks-and-mortar betting outlets and an online bookmaking site. Using 2014 figures, the two companies would account for approximately $1.5 billion in annual revenue.

Under the merger, the two companies would retain their own brands, according to the announcement. Paddy Power operates more than 600 parlors in Ireland and the United Kingdom. Betfair has customers throughout the world, though the company has lately withdrawn from some jurisdictions because of legal challenges to its core business, which allows users to take wagers from other customers.

Betfair purchased TVG in 2009, in large part to gain a foothold in the U.S. if lawmakers allowed for expanded gambling. Last year, TVG merged with HRTV, which had been its only major competitor in broadcasting live horse races in the U.S.

Betfair also launched an online casino in New Jersey after the state legislature legalized the practice in 2013.

If the two companies complete the merger, Paddy Power shareholders will own 52 percent of the combined company. Paddy Power shareholders also would receive a special dividend of $124.8 million, the companies said. Breon Corcoran, the chief executive of Betfair, would become CEO of the combined company.

The companies said they remain in the due-diligence phase of completing the merger and would announce further details over the next several weeks.