Merged bookies Paddy Power-Betfair's share price falls 1.4%

Shares in the newly merged Paddy Power-Betfair betting services giant closed its first day of trading in Dublin yesterday, down nearly 1.4% at €139.

It followed Paddy Power shares jumping 4% on Monday — the last day of trading before its merger. However, the €8bn merger — which creates a €1.4bn revenue-generating industry leader —is fully expected to offer long-term investment attractiveness.

Paddy Power shareholders are set to share an €80m windfall early next month, as one of the positive consequences of the merger.

That figure rises to €140m when ordinary dividends linked to last year’s company performance are included.

In a detailed report on the new company, David Jennings and Robert Stokes of Davy Stockbrokers said: “We estimate that the group will generate over £1.05bn [€1.4bn] in free cash flow over the next three years, with a commitment already in place to pay out 50% of net income in the form of ordinary dividends.

"Should the group choose to, it could supplement these ordinary dividends with further pay-outs and buybacks over time.

“There is scope to supplement substantial organic growth through acquisitions that further extend the group’s geographical presence and technological capabilities.”

The pair also noted that Paddy Power-Betfair will likely enjoy lower earnings volatility than many of its peers due to a more diversified product offering and geographic reach.

Paddy Power is expected to show a 10% profit increase when it publishes its last set of singular annual results next month.


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