Paddy Power to pay dividends of €141m after Betfair merger

Paddy Power will pay dividends totalling more than €140 million or €3.18 a share to investors in early March following its merger with rival Betfair.

The Dublin-listed bookie expects to report that its operations earned profits of about €180 million in 2015, its final full year as a standalone entity before joining forces with its competitor next Tuesday.

Following the deal, Paddy Power will pay a special dividend of €80 million - €1.80 a share - to investors.

Yesterday it said that it will pay a final dividend for 2015 of €1.20 a share, a total of €53 million, and an 18 cent a share dividend covering January 1st to February 1st, a total of €8 milllion.

“The payment date for the three dividends is March 2nd 2016,” Paddy Power said, meaning that its shareholders will receive a total of €141 million on that date.

Paddy Power Betfair will be worth almost €11 billion at yesterday’s share prices when the merger creating the enlarged group goes through. Both companies’ shareholders and the Irish and UK competition regulators have approved the deal.

Betfair is paying its shareholders a final dividend of 24.3 pence sterling. It needs approval from the British high court to give effect to its side of the transaction on February 1st. The merger is expected to go through the following day.

Paddy Power said that it expects 2015 operating profit before exceptional items to be €180 million, which translates as €3.33 a share before costs relating to the acquisition.

Trading in the last seven weeks of 2015, the period after the release of its last interim management statement, was positive.

Paddy Power Betfair will have €2 billion in revenues and businesses in Ireland, Britain, Europe, the US and Australia. Merging is likely to save both companies a total of €70 million a year once the transaction is fully bedded down.

The proposal cleared its last regulatory hurdle when the Competition and Consumer Protection Commission approved the deal earlier this month, saying it would not "substantially lessen competition in any market for goods or services in the State".

Paddy Power shareholders will own 52 per cent of the enlarged group with Betfair’s owners taking 48 per cent. It will be headquartered in the Republic and have its main stock market listing in London with a secondary listing in Dublin.

Betfair chief executive, Breon Corcoran, will take the same role at the new business. His opposite number at Paddy Power, Andy McCue, will become its chief operating officer.

In a note to investors, Davy described Paddy Power’s underlying earnings growth as impressive and said earnings before interest and taxes (ebit) came in at €2.4 million or 1.3 per cent ahead of forecasts.

It said both Paddy Power and Betfair were entering the merger with “excellent underlying momentum”.

Other players in the betting industry, including Ladbrokes and Coral, are also merging to combat rising regulatory and other costs.