Paddy Power Betfair sketches out growth plans
Merger partners continue to play cards close to chest with deal set to complete by Q1 2016
The Paddy Power Betfair merger is expected to complete by the first quarter of next year with £50m of recurring synergies the two firms announced this morning, but further details on the proposed post-merger plans remained scarce despite a hint at retail and technology enhancements.
In a call with analysts this morning after agreeing terms on the deal, Betfair CEO Breon Corcoran and Paddy Power CEO Andy McCue gave little away in regards to the firm’s long term strategy, but did hint at an increased retail presence and a move towards swift technological integration.
Corcoran said Paddy Power Betfair would be the “largest regulated online gaming operator in the world”, to be headquartered in Dublin with a primary listing in London and a secondary listing on the Irish stock exchange.
Despite a pledge to create recurring annual pre-tax cost synergies of approximately £50 million within three years, both sides were keen to stress the deal was more about generating revenue growth through scale and best-in-class product than wholesale cost-cutting measures.
On technology, there were hints at how Betfair’s exchange might interact with Paddy Power’s sportsbook, but few details on whether features such as Betfair’s Price Rush might be extended across the brands.
“Access to the exchange with significant volumes traded can significantly enhance Paddy Power’s industry-leading fixed-odds risk and trading operations,” McCue said. “The exchange can also facilitate the creation of new sportsbook innovation and features,” he added.
The deal should also see the introduction and extension of multi-channel features. It is understood that Paddy Power’s small yet over-performing retail presence was particularly attractive to Betfair, with Corcoran describing the quality of the Paddy Power retail estate as “second to none”.
Initiatives including in-store sign-up, cross sell and in-store deposit and withdrawals were listed as growth areas post-merger and it would not be a surprise to see that retail estate expanded once the deal is completed.
Paddy Power Betfair will maintain both brands in Europe, with McCue stressing the differentiated, complementary and distinct nature of the two brands.
Only 3% of regular UK online bettors are currently using both brands, and with three-quarters of regular bettors using neither McCue promised “more focused brand investment” to target growth.
When it comes to savings, Betfair CFO Alex Gersh said he was “very confident” of achieving the £50m of synergies, but refused to be drawn on details. “This is not about cost synergies, this is about growth and continuing to invest in the business,” he said.