Investors bet against bookie as doubts grow over £10bn merger

The blockbuster merger to create the world’s largest gambling company ‘is not a done deal’ and could be blocked by the competition watchdog, analysts warned.

To be successful, the £10billion tie-up between Paddy Power and Betfair owner Flutter and Canadian rival the Stars Group must survive the tough new approach being taken by the Competition and Markets Authority (CMA).

The watchdog announced it was investigating the merger last week. 

And investment firms such as Blackrock have started building their bets against Flutter, making the bookmaker the stock exchange’s third most shorted stock.

Concerns grew as it emerged the combined entity would hold more than 40 per cent of the UK’s online sports betting market – well above the 25 per cent threshold where the CMA takes an interest.

Experts warned that the CMA’s recent investigation into Amazon’s takeover of Deliveroo marked a ‘change of character’ at the watchdog, a shift that leaves the gambling giants in uncharted territory. 

The new approach has been implemented by Andrew Tyrie, who was the scourge of the banks during his time as chairman of the Treasury Select Committee of MPs between 2010 and 2017.

He has already upped the use of draconian rules forcing merging businesses to run separately while they are investigated – known as ‘hold separate orders’ – to a five-year high.

Shore Capital analyst Greg Johnson said: ‘If the CMA follows its previous decisions in the sector this merger should be approved. 

‘However since then the market dynamics have changed materially. It was never going to be a done deal.’

• The CMA has scolded concert ticket resale websites Stubhub and Viagogo for starting to merge – despite not getting the sign-off from regulators. The businesses will have to send a report to the CMA every two weeks from February 21 proving they have not started to merge.