Thursday 18 January 2018

Paddy Power Betfair sees higher savings after deal

Breon Corcoran, Paddy Power Betfair
Breon Corcoran, Paddy Power Betfair
Donal O'Donovan

Donal O'Donovan

Gambling group Paddy Power Betfair is likely to sit out deal making in the near term as the newly merged group beds-in to its new structure, according to chief executive Breon Corcoran.

Betfair and Paddy Power completed their £6bn (€7bn) merger in February, initially targeting annual savings of £50m.

It was part of a flurry of deal making in the sector, where businesses are scaling up in response to rising tax and the need for major spending on the technological that powers digital and in-store betting.

Bingo hall operator Rank Group said this week that it has an eye out for deals after its joint bid with online gambling company 888 Holdings to take over William Hill was abandoned.

UK betting chains Ladbrokes and Gala Coral are pressing ahead with a merger, and Irish operator Boylesports is bidding for stores the two will sell to gain competition approval for that deal.

Yesterday, Breon Corcoran said further consolidation in the sector "is inevitable".

However, Paddy Power Betfair is "not looking at anything at the minute", he said.

With its merger just closed, conversations around future M&A or alternatively returning excess cash to shareholders are for 12 months' time, he said.

He was speaking after results published yesterday showed that Paddy Power Betfair had slumped to a loss of £47.5m as it absorbed merger costs in the six months to the end of June, compared with a £106.5m profit a year earlier. Shares dipped on the news, down 2.7pc to €113.25 each in Dublin.

The results reflect £195m in merger costs including advisory fees and stamp duty.

On the flip side, the company said synergies it now expects from the merger will be higher, forecasting £65m in annualised cost savings by next year, up from earlier estimates of £50m in savings a year.

Yesterday's interim results showed a 31pc increase in first-half earnings.

Following the merger the group will retain its two brands operating side by side - with Betfair, which lets customers bet against each other, staying focused on its "rational", more "money-centric" customers.

And the Paddy Power brand will play to its more humorous and character-led branding exemplified by its cheeky advertising campaigns.

Combined group earnings were £181m, with full year earnings growth of up to 30pc to between £365m and £385m expected. (Additional reporting Reuters)

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