Shares in Paddy Power Betfair fall as much as 8pc as CEO steps down
Shares in Paddy Power Betfair fell as much as 8pc in morning trading in Dublin after the company confirmed chief executive Breon Corcoran is to depart.
The company told the market this morning that he would be replaced by Worldpay’s UK boss Peter Jackson. A timetable for the change was not provided.
There had been much speculation about Corcoran’s position after a weekend report that the bookmaker had hired headhunters to find his successor.
He has been in the role around 18 months, since the £7bn merger of Paddy Power and Betfair was completed last year. He had been Paddy Power’s chief operations officer but left for Betfair in 2011.
The share price has performed sluggishly of late, with challenges posed by the regulatory environment in some markets and integrating the technology platforms of Paddy Power and Betfair.
“This was a very difficult decision to make, and there is never a good time to leave, but this is the right decision for me and my family,” Corcoran said.
On Monday morning, the firm Paddy Power announced that Mr Corcoran will step down as CEO - and that Peter Jackson will become the Group’s new CEO.
While Peter’s start date is yet to be confirmed, Breon will continue to lead the Group in the meantime, "completing the integration of the Paddy Power and Betfair businesses, and ensuring the delivery of an orderly transition".
David Holohan, chief investment officer at Merrion Capital, said he expects a negative reaction by the market "probably in the realms of up to 5pc".
The Sky News report said the company had engaged external headhunters to advise it on finding Mr Corcoran's successor, as part of a process being led by the company's chairman Gary McGann.
Mr Corcoran had been Paddy Power's chief operations officer before leaving to head up Betfair in 2011. The £7bn (€5.9bn) mega-merger brought him back to the Irish bookmaker as head of the merged entity. Paddy Power's chief executive Andy McCue left the business and is now running The Restaurant Group.
"I don't think anybody had been mooting this as a possibility. He's been in Paddy Power Betfair a relatively short time and I think a big part of the logic between the merger of the two companies was that this was a way of bringing Breon Corcoran back to Paddy Power," Mr Holohan said.
"Breon Corcoran has been head of the combined entity for a relatively short period of time and in that time a lot of previous senior personnel from Paddy Power have left. So there's no clear internal candidate to replace him if he was to go."
The company's share price is down some 15pc in the last 12 months with regulatory challenges on the horizon in Australia.
Prime Minister Malcolm Turnbull's government is poised to implement a ban on credit betting. Paddy Power Betfair's rival William Hill said last week that 30pc of the amounts wagered with it in Australia were bets made with credit rather than people's own money.
In the UK, the betting industry has been facing pressure over the use of controversial fixed odds betting terminals (FOBTs) which have been called the "crack cocaine of gambling".
But that pressure may recede after a 'Daily Mail' report over the weekend said UK Chancellor Philip Hammond has scrapped a review of the machines - which could have seen them banned - as he seeks to maintain the Treasury's tax receipts.
Paddy Power Betfair will report its half-year results tomorrow. As well as regulatory challenges, another key issue facing the company has been integrating the Paddy Power and Betfair technology platforms.
In May, Mr Corcoran called this a "key strategic focus for 2017", saying he hoped the process would be complete by the end of the year.
He said new products would be available to customers more quickly once this process was complete.
In a note circulated last week, Davy analysts David Jennings and Joseph Quinn said the roll-out of new products was being "depressed" by the integration of the platforms.
They said that despite the regulatory issues, "the main risk is closer to home and a feeling that Paddy Power Betfair is struggling to maintain share while it completes its platform migration".
"That could equate to near-term sluggishness," they said.
However, the analysts said they remained confident in the company's longer-term outlook and that recent share price falls could represent a good buying opportunity for investors.