Paddy Power shares set to fall on chief executive succession speculation
Bookmaker, created by merger last year, poised to report first-half results on Tuesday
Gary McCann (left), chairman of Paddy Power Betfair, and chief executive Breon Corcoran. Photograph: Eric Luke
Shares in Paddy Power Betfair are set to fall when trading in London opens on Monday on the back of a report over the weekend that the bookmaker has begun the search for a successor to chief executive Breon Corcoran just a year after the group’s creation by merger.
It was not clear in the report, from Sky News, whether the search, being conducted by executive headhunting firm Spencer Stuart, was prompted by a signal from Mr Corcoran that he is planning to move on or whether it is part of succession planning that the board of a publicly-quoted company would be expected to undertake in the normal course of business.
David Holohan, chief investment officer at Merrion Capital, in Dublin said that the report “won’t be taken well” by investors, who will be seeking clarification at the latest on Tuesday, when Paddy Power Betfair reports first-half results.
Mr Corcoran quit as a director at Paddy Power in late 2011 to join UK-based Betfair the following year. He was brought back into the fold as chief executive of the enlarged group under their multibillion euro merger in February 2016.
It was known at the time that Paddy Power’s board saw the return of the executive as a significant consideration when it forged ahead with the bid in late 2015.
“A key attraction of the Paddy Power Betfair merger was to bring Breon Corcoran back to Paddy Power, given his enormous success with Betfair,” said Mr Holohan. “Post the merger, many senior management positions were filled with Betfair personnel, making reports of a CEO departure all the more surprising.”
The search is being led by Gary McGann, Paddy Power Betfair’s chairman, according to the report. A spokesman for the bookmaker didn’t immediately respond to a request for comment.
The group, which currently has a combined market value of €7.42 billion, is expected to report on Tuesday that its first-half earnings before interest, tax, depreciation and amortisation (ebtitda) surged 27 per cent surge to £230 million (€255 million) year-on-year, according to Goodbody Stockbrokers.
“Paddy Power Betfair’s share price has under performed recently due to increased regulatory concerns (mainly in Australia) and worries regarding its growth outlook” said Goodbody analyst Gavin Kelleher in a note published last week.