Paddy Power Betfair balances potential dividend against takeovers
Bookmaker focused on continuing to derive benefit from merger, says chief executive
Paddy Power Betfair chief executive Breon Corcoran: said betting group was focused on continuing to derive benefit from merger. Photograph: Eric Luke
Paddy Power Betfair could look at buying other rivals or returning cash to shareholders from next year, according to its chief executive, Breon Corcoran.
Speaking after the group published its first interim results since Paddy Power and Betfair merged in February to create the combined entity, Mr Corcoran acknowledged that it could consider both possibilities over the medium term.
He said that on the basis that Paddy Power Betfair generates large amounts of cash, has a strong balance sheet and its industry is consolidating, it could bid for other players in its sector. “Not that we are looking at anything at the moment,” he added.
Mr Corcoran pointed out that before their merger both Paddy Power and Betfair had paid dividends. “If cash accumulates on the balance sheet, and there is no M&A, we will think very hard about returning it to shareholders,” he said.
However, he stressed that both were issues the group was more likely to discuss in 12 months’ time as it was focused on continuing to derive benefit from the merger.
Paddy Power Betfair believes that the deal will result in overall saving s of £65 million (€76.5 million) a year rather than the £50 million flagged when the merger was first proposed a year ago.
It has completed its planned restructuring ahead of schedule, including shedding about 300 jobs, which Mr Corcoran said would account for about 60 per cent of the savings.
The organisation now has about 1,000 staff devoted to product and technological development, which it believes is the largest in its industry and says that this is already paying dividends.
Mr Corcoran noted that the cross-fertilisation meant it was able to offer a range of new bets to all customers. For example, during this year’s European football championships it extended to Paddy Power clients a Betfair product offering odds on what would happen in the next minute of play.
The group confirmed yesterday that Paddy Power co-founder and former chief executive Stewart Kenny is stepping down from the board of the gambling giant he effectively helped create.
In 1988, Mr Kenny and John O’Reilly joined their bookmakers with the Richard Power Group and Corcoran’s to form Paddy Power. They wanted to create a chain with the muscle to withstand the British players that had more than 20 per cent of the Irish market.
Mr Kenny was chief executive, and he stayed in the role until 2002, overseeing the company’s launch on the Irish Stock Exchange in 2001 and the beginning of its transformation from bookie shop chain to multifaceted betting group. He spent a further year as chair before becoming a non-executive director.
Paying tribute to him on Wednesday, Paddy Power Betfair chairman Gary McGann, said: “He was instrumental in creating a highly successful international business from a small domestically focused retail operation at inception”.