Paddy Power bolsters Australian presence

Paddy Power has strengthened its position in the regulated Australian sports betting market by acquiring the remaining shares in Sportsbet for €100m taking full ownership of the country’s largest bookmaker, the Irish firm announced this morning.

Patrick Kennedy, Paddy Power’s chief executive, called Sportsbet a “cracking business” adding: “When we acquired 51% of Sportsbet in 2009 we were confident that we were investing in a business with strong potential in a growing market. That confidence has been borne out and some.

The team has made great strides in marrying the best of both Sportsbet and Paddy Power. This is a good deal to acquire the remaining shares early which will allow us to drive development and investment and secure full participation in the upside of the business.”

Paddy Power first acquired a controlling stake of 51% in Sportsbet for AUD48.5m (€27.2m) in May last year appointing four of its directors to the Sportsbet board, including chief executive Kennedy and head of non-retail and online Breon Corcoran.

The firm today announced it would acquire the remaining 39.2% minority stake in the Northern Territory-licensed private operator for AUD132.6m (€100.9m) and that the deal was subject to shareholder approval and is “expected to be completed by the end of February 2011″.

The 100.9m payment is made up of €83.8m in cash from Paddy Power’s existing cash reserves; the issue of €14.1m of new Paddy Power shares calculated by reference to a share price of €29.17 per share and the Australian dollar exchange rate immediately prior to completion; and the assumption of a €3.0m obligation to “certain Sportsbet employees”, Paddy Power said in a statement.

A maximum additional payment of AUD25m is payable if Sportsbet’s 2013 EBITDA exceeds AUD80m. A special dividend of €6.5m will also be paid to all Sportsbet shareholders prior to completion, the Irish bookmaker said.