Flutter suspends 2020 dividend; Ashkenazi drops out as COO

27th March 2020 9:59 am GMT
Flutter Entertainment

The boards of Flutter Entertainment and The Stars Group (TSG) have provided an update on their proposed merger, confirming the suspension of the combined group’s dividend for the current financial year and a new non-executive role for TSG chief executive Rafi Ashkenazi.

The companies said that the proposed merger is expected to complete by 31 October, with both boards of directors continuing to believe in the strategic rationale for the combination, despite the impact of COVID-19.

However, the combined group is suspending all dividends for the current financial year due to the effects of the pandemic and will consider reinstating them when the sporting calendar resumes, depending on the group's balance sheet position.

Flutter Entertainment shareholders will receive a final dividend for 2019, subject to approval at the company’s 2020 annual general meeting (AGM) on 14 May. The final 2019 dividend was expected to be 133 pence per ordinary share. Given the impact of COVID-19, the company's board has now proposed that the final dividend be paid in the form of ordinary shares.

In addition, the board had expected to give Flutter shareholders a pro-rated dividend immediately prior to completion of the merger, but given the anticipated financial profile of Flutter in the current year, the board no longer considers it prudent to propose the pro-rated dividend. TSG has never declared nor paid dividends and is not expected to do so prior to completion.

The board of directors of the combined group was also confirmed today, comprised of six non-executive directors. Divyesh Gadhia will serve as deputy chair, alongside Rafi Ashkenazi, Richard Flint, Alfred Hurley Jr, David Lazzarato, and Mary Turner. The business will be led by current Flutter chief executive Peter Jackson.

TSG chief executive Rafi Ashkenazi was previously named chief operating officer of the new group but it was revealed today that he will now serve as a consultant to the company and non-executive director. This followed “extensive discussions about the optimal construct of the senior executive team,” the company said, “and having regard to a number of personal considerations”.

Flutter Entertainment chief executive Peter Jackson commented: “In these challenging times I am more convinced than ever of the strategic fit of these two complementary businesses. The combined business will enjoy improved geographic and product diversification and allow us to advance our strategic goals.

“I am delighted that Rafi has agreed to join the Flutter board and to be available to me as a consultant given his extensive knowledge of Stars' international business. We continue to work with various competition and anti-trust authorities globally to secure the few remaining approvals required. We do so while never losing sight of our current primary objective to ensure the safety of our staff and customers during these unprecedented times.”

Shares in Flutter Entertainment plc (LSE:FLTR) were trading down 5.67 per cent at 6,990.00 pence per share in London Friday morning, while shares in The Stars Group Inc (TSX:TSGI) closed up 1.12 per cent at CAD$27.01 in Toronto Thursday.

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