Paddy Power will buy an outstanding 39 per cent stake in Australia's Sportsbet for €101 million, giving it full control of the group and strengthening its position beyond Europe.
Paddy Power said today the acquisition, which will be largely funded from its own cash reserves, would provide a springboard for expansion down under.
"It gives us the ability to develop further in Australia. For as long as we owned 61 per cent of the business it wasn't easy to make further acquisitions because you had minority shareholders so I think it positions us to do other things," chief executive Patrick Kennedy said.
Paddy Power will fund the deal with €84 million of cash, the issue of €14 million worth of shares and assuming a €3 million obligation to some Sportsbet employees.
Paddy Power will pay an additional A$25 million if Sportsbet's 2013 EBITDA exceeds A$80 million.
After the Sportsbet acquisition, Paddy Power will have €66 million in cash, which Mr Kennedy said would help fund any future acquisitions.
He declined to give a profit forecast for next year but said the Sportsbet deal would add to earnings.
Kennedy reiterated Paddy Power was on course for growth of up to 40 per cent in underlying earnings per share this year.
Heavy snowfalls have cancelled some sports fixtures in Ireland and Britain, including the first day of the Leopardstown Christmas festival, which normally sees thousands of people attend the horse race meeting in Dublin on December 26th.
Mr Kennedy said Paddy Power would be able to absorb the cancellations.
"Three quarters of our profits are online and almost half of the paddypower.com online revenues come from games and bingo and poker and casinos and are not dependent on sporting fixtures."
Reuters