New Paddy Power Betfair trades as 'PPB' on markets
Paddy Power Betfair Plc began trading for the first time as a single entity on the Irish and London stock exchanges yesterday.
The firm began trading yesterday morning after the €8bn merger between the two betting giants was completed.
Shares fell by 2pc by 2.30pm yesterday but Davy Stockbrokers analyst David Jennings said that the drop shouldn't come as too much of a concern to shareholders, saying that investing in the betting firm should be seen as a longer-term investment.
"Last September, we wrote a detailed analysis of Paddy Power Betfair, which outlined the key aspects of the new company's investment thesis.
"As we see it, the combined entity has the potential to be a global leader in online gaming," Mr Jennings said. Trading began after shareholders from both firms overwhelmingly agreed to the merger in December.
Mr Jennings said that the business has the scope to deliver high earnings growth in the coming years.
"We forecast that the group will deliver 27pc compound annual earnings growth over the next three years and estimate that the group will generate over £1.05bn in free cash flow over the next three years. "Paddy Power Betfair has a commitment already in place to pay out 50pc of net income in the form of ordinary dividends," Mr Jennings said.
The new entity is headquartered in Dublin.
Given its size, it will be included in the FTSE 100 index.
Paddy Power Betfair Plc leads its category listing on the index with combined revenues expected to generate more than €1.4bn.
Notices were issued yesterday by both the Dublin and London stock exchanges informing traders that the combined companies' ticker is 'PPB'.
Andy McCue, who previously headed up Paddy Power as its CEO, will now become chief operating officer while former Betfair chief executive Breon Corcoran is now leading the new company.