DUBLIN, May 23 (Reuters) - Paddy Power Betfair has agreed to merge its U.S. business with fantasy sports company FanDuel to target the U.S. sports betting market that is set to open up in the coming years, the Irish bookmaker said on Wednesday.
Under the agreement, Paddy Power Betfair will contribute its existing U.S. assets worth $612 million along with $158 million of cash to take a 61 percent stake in the combined business, with existing FanDuel investors owning 39 percent.
Paddy Power Betfair can increase its ownership to 80 percent after three years and 100 percent after 5 years via call and put options at the prevailing market valuations, it added.
The Dublin-based company will have operational control of the business, which will become a fully consolidated subsidiary. The deal is expected to close in the third quarter of the year, it said.
"This combination creates the industry's largest online business in the U.S., with a large sports-focused customer base and an extensive nationwide footprint," Paddy Power Betfair Chief Executive Peter Jackson said in a statement.
Reporting by Padraic Halpin; Editing by Adrian Croft