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Paddy Power and Betfair will create a gambling giant

Tuesday December 8,2015 : ANALYST SAYS BETFAIR-PADDY POWER COMBO WILL TOP THE U.K. MARKET
 
Prediction that merged companies will hold an 18 percent UK market share.
 
The merger of online gambling groups Paddy Power and Betfair, due to take place early next year, will create a gambling giant that leads the UK market, says Nomura analyst Richard Stuber in a report this week.
 
Stuber says the combination is a good fit due to Paddy Power's distinctive brand and recreational punter bias, and Betfair's more sophisticated, price-sensitive player base.
 
“Scale is increasingly important and we expect the combined entity to be the UK market leader in online betting and gaming,” the analyst opines, estimating that the combined business will achieve an 18 percent share of the online market, slightly more than current leader William Hill plc's 15 percent...and he expects the merged companies market share to grow to 20 percent by 2020.
 
Nomura claims that the impact of operating leverage in online gambling has been “consistently and materially underestimated” and forecasts that Paddy Power-Betfair will generate an earnings margin of 35 percent by 2019, widening to 40 percent by 2024 - well ahead of rivals in the 20 to 25 percent bracket.
 
Last week Betfair reported on its latest results , revealing GBP 274.4 million in revenue, a 16 percent improvement on the preceding quarter. EBITDA increased 9 percent to GBP 80.5 million and operating profit rose 12 percent to GBP 67.2 million.



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