SHARES in Paddy Power and Betfair surged by around 15% each on Wednesday morning as news broke of a proposed merger between the two betting giants.
If the deal is concluded, Paddy Power shareholders would own a 52% stake in the newly-formed Paddy Power Betfair Group. The merger would see the new entity have a revenue of over £1 billion.
Betfair chief executive Breon Corcoran, formerly of Paddy Power, said: "The proposed merger with Paddy Power is hugely exciting. It would create a truly global sports betting group with unmatched products and talent, and significantly enhanced scale. The combined business would be one of the world’s largest online sports betting operators, with revenues totalling more than £1 billion."
As with the recent Ladbrokes and Coral deal, the merger is subject to receiving approval from the competition authorities.
Both companies announced strong half-year results on Wednesday.
Paddy Power's main figures for the first six months of 2015 include:
*Operating profit growth of 33% to €80m, or 68%1 before €32m in new taxes and product fees;
*Net revenue up 25% with strong double digit growth across all Online and Retail divisions;
*Diluted EPS up 31% to 144.8 cent;
*€391m returned to shareholders through B Share Scheme;
*Interim dividend up 20% to 60.0 cent per share;
*Substantial strategic progress with product enhancements, new marketing campaigns and efficiency gains.
*Net revenue growth of 34% to €345m, with sportsbook up 42% and eGaming up 14%. Operating profit up 45% to €70m:
*Online (ex Australia): net revenue up 26% to €200m with sportsbook up 37% and eGaming up 14%.
*Operating profit increased by 21% to €31.6m, despite €28m in new taxes;
*Online Australia: Sportsbet is now the largest online brand in Australia, driven by accelerated market share growth with sportsbook net revenue up 46% to €151m and stakes up 37%. Operating profit increased 69% to €38.8m;
*Substantial operational improvements in Italy, where net revenue grew by 24%, and operating costs fell by 19%. Operating loss reduced by €4.2m to €4.7m;
*Mobile net revenue accounted for 67% of online revenue, with 78% of active customers transacting via mobile.
*UK Retail net revenue up 21% (9% like-for-like). Operating profit up 3% to €12.0m despite €2m of additional Machine Gaming Duty and the negative impact of new machine regulation. Estate now 336 shops with a net 13 units opened in the period;
*Irish Retail net revenue up 14% (10% like-for-like). Operating profit up 36% to €10.6m. Estate now 252 shops with 7 units opened in the period.
*Full year 2015 reported operating profit expected to be ahead of 2014 and the consensus market forecast.
Andy McCue, Chief Executive, Paddy Power plc, said: “Paddy Power has delivered a very strong performance in the first half with net revenue up 25% in constant currency and operating profit up 33%. Underlying operating profit was up 68% excluding the impact of new taxes and product fees. While this performance was broadly based across all our online and retail divisions, Australia has been the standout with reported operating profit up 78%.
We have made substantial progress implementing the strategy we set out in March, with further payback to come from new mobile product releases, refreshed marketing campaigns and efficiency gains. We now expect full year 2015 reported operating profit to be a mid to high single digit percentage above 2014 and the consensus market forecast.”
Betfair reported 15% year-on-year rise in first-quarter revenue to £135.4 million, with sports betting showing an 8% growth to £89.9 million, despite being compared to a World Cup period, gaming increasing by 27% to £25.1 million and US turnover up 42% to £20.1 million.
Mobile revenues are up 57% and 75% of UK customers now use this platform. CEO Breon Corcoran stated: "Double-digit revenue growth against the period containing the World Cup last year is particularly encouraging and was ahead of our expectations. Betfair has continued to attract and retain customers through investment in our products, attractive pricing and market-leading promotions."
More on this story to follow later today. Full details in The Irish Field on Saturday. Online from 9.30pm Friday