Paddy Power ups foothold in market Down Under

PADDY Power has further extended its new foothold in the Australian betting market on the back of its new subsidiary there – Sportsbet – agreeing to acquire local online betting company International All Sports (IAS).

At its annual general meeting, last month Paddy Power announced it had bought a 51% stake in Sportsbet – the leading online betting operation in Australia – for just over €27 million, with the option to buy it outright at a later date. Yesterday, Sportsbet announced the overall acquisition of the previously Australian Stock Exchange-listed IAS in which it already held a near 20% stake. The deal values IAS at €22.4m.

Paddy Power chief executive Patrick Kennedy said that IAS will complement Sportsbet, creating “by some distance, the largest corporate bookmaking business in Australia.”

“This acquisition underpins the potential of Sportsbet to build its market position and expands Paddy Power’s reach into the Australian market,” Mr Kennedy added.

Last year IAS generated pre-tax profits of €2.7m and had gross assets of €23m.

The takeover of IAS, which is pending shareholder approval at an extraordinary general meeting, is expected to be completed by October when Sportsbet’s chief executive, Matt Tripp, will oversee it.

When announcing Power’s initial investment in Sportsbet, Mr Kennedy said that the Irish company had no ambition to expand outside of the lucrative online and telephone betting market in Australia, or to introduce the actual Paddy Power brand there. IAS will be amalgamated with Sportsbet and the latter brand will remain in place.

“We view this as a strong deal for the company as the relaxation of gambling legislation in Australia (notably advertising restrictions) has created an extremely attractive growth market, evidence of which can be seen from Sportingbet’s third quarter results, where the number of internet wagers increased by 61% on a quarter-by-quarter basis,” said Killian Murphy of Goodbody Stockbrokers.

Paddy Power’s expansion plans inIreland and Britain will mainly be executed via organic means, rather than through acquisition in the current year.