In a surprise move, the governance of Paddy Power Betfair (PPB) has confirmed that it will create a new US facing subsidiary combining its Betfair US business with leading DFS operator FanDuel.

Issuing a market update, PPB confirmed that it had reached an agreement with FanDuel investors to create a new enterprise servicing the US betting and gaming market.

The planned subsidiary will see PPB merge its Betfair US racing and wagering properties valued +$600 million with FanDuel’s DFS enterprise.

Furthermore, PPB will contribute $158 million in cash towards funding the new business and clearing FanDuel’s corporate debt ($76 million).

The transaction sees PPB take a majority 61% stake in the US enterprise, which moving forward will act as a consolidated subsidiary of the FTSE100 betting group.

It also: “Strengthens the Group’s opportunity to target the prospective US sports betting market through the addition of a strong brand, large existing customer base and talented team. The scale of the combined business also means it is well positioned in discussions with providers of market access for sports betting.”

Updating investors, PPB governance detailed that the company would hold the right to appoint the new enterprise’s CEO, along with the majority of the Board of Directors.

The agreed enterprise terms, further give PPB governance the first right to acquire the remaining shares of the business, within the first five years of trading.

Confirming the agreement, Peter Jackson Group CEO of Paddy Power Betfair stated: “We are excited to add FanDuel to the Group’s portfolio of leading sports brands. This combination creates the industry’s largest online business in the US, with a large sports-focused customer base and an extensive nationwide footprint.

“The Group has leading sports betting operating capabilities globally and strong operations on the ground in the US. Together with our substantial financial firepower, we believe we are now well placed to target the prospective US sports betting opportunity.”

Matt King, CEO of FanDuel, said: “We are excited to bring these two great businesses together. The combination of brands and team, along with a shared culture and vision for the future, creates the leading gaming destination for US sports fans.”