Paddy Power not decided on the level of redundancies ahead of Betfair merger

Paddy Power’s management has said it will not decide on the level of redundancies stemming from its near €7bn merger with UK rival Betfair until completion of the deal in the first quarter of 2016.

Speaking after yesterday’s EGM, where the company’s shareholders unanimously voted in favour of the deal, Paddy Power chief executive, Andy McCue said that management hadn’t decided on how synergies might affect the workforce and that no integration planning would commence until the deal was complete.

He remarked that Betfair technically remains a competitor until that date, which should fall before the end of March.

Both companies held shareholder meetings yesterday — Paddy Power at its Dublin headquarters and Betfair in London — with virtually 100% of both sets of investors backing the deal.

Late last week, the UK’s Competition and Markets Authority cleared the transaction at the Phase 1 stage.

Yesterday’s votes mean that approval is now only required from the Competition and Consumer Protection Commission, here.

Mr McCue told reporters that the company is “hopeful of a positive outcome” and still expects the deal to complete during the first three months of 2016.

Paddy Power shareholders have approved a proposed merger with Betfair at the company's EGM in Dublin today. https://t.co/nLY5ZM2qjz

— RTÉ Business (@RTEbusiness) December 21, 2015

Despite the news, Paddy Power’s shares dipped by 1.5% yesterday.

If that is the case, as expected, the new entity will be called Paddy Power-Betfair and will be headquartered in Dublin with its shares dually listed here and in London.

Mr McCue will be chief operating officer of the group, with his current counterpart in Betfair, Breon Corcoran assuming the chief executive position.

Synergies surrounding technology, product, geography (Betfair has operations in the US, while Paddy Power has strong market position in Australia) and brand positioning will lead to the group being the largest regulated online gaming operation in the world.

While Mr McCue didn’t go into detail, he added that synergies would result in £50m in recurring annual cost savings. Some £400m will be spent on marketing and technology improvements.

The Irish company was also asked about future deals, yesterday, and the prospect of its enlarged size leading to it snapping up a host of smaller players over time — the new entity will have annual sales of £1.2bn and a staff of 7,000.

Chairman, Gary McGann said the sector is not so much about M&A activity, but more about differentiating one’s overall offering from that of the competition.

Mr McCue said the primary focus, post-deal completion, will be about integration.

He added that international growth is also top of the agenda, suggesting further inroads into the US and European markets.

While the Betfair merger — Paddy Power shareholders will control 52% of the new company — will strengthen the Irish firm’s online presence, Mr McCue said the company still intends to selectively expand its retail division in both Ireland and the UK, on an annual basis.

In its last trading update, published in November, Paddy Power said it expects full-year operating profits for 2015 to show mid-to-high digit percentage growth, despite a more challenging second half following on from a very strong first half.

In those first six months, revenue in the UK retail division grew 21%, year-on-year, to €108.3m, while operating profit in the Irish retail unit was up 36% at €10.6m.