Paddy Power shares rise on eastern European gamble

Shares in Paddy Power-Betfair jumped by as much as 2.5% on the back of the betting group taking a punt on the growing eastern European markets of Georgia and Armenia.

The company has acquired a controlling 51% stake in Tbilisi-based online betting company Adjarabet for £101m (€115m) and has an option - and expects - to buy the remainder of the business after three years.

Paddy Power-Betfair chief executive Peter Jackson said the acquisition is in line with the company's strategy of "establishing podium positions in attractive online markets".

Davy said the bolt-on buy will likely add a low-to-mid-single percentage to its 2019/2020 adjusted earnings forecasts for the company.

"While reasonably modest in the context of the overall group, it is a timely reminder that the group investment thesis extends beyond merely the evolution of sector regulation. The suite of growth opportunities available to Paddy Power-Betfair - both organically and inorganically - remain extremely attractive," said Davy analyst Michael Mitchell.

Adjarabet controls around 40% of the fast-growing online betting and gaming market in Georgia - through casino, sports, poker and peer-to-peer games.

The company also has a 10% share of the newly-regulated but high growth potential online betting market in Armenia.

Most recently filed accounts showed Adjarabet - which is being sold by a Georgian investment vehicle - to have revenues of around €56m and profits of €14m in 2017.

"It is currently a gaming-led brand, although the opportunity to bolster its sports betting proposition, as part of Paddy Power-Betfair, is obvious," said Mr Mitchell.