Paddy Power Betfair

Frank101

Do you think that Paddy Power Betfair might be a good option to invest in after the outcome of the Brexit? It mainly based in Britain. The aftermath of the 2008 recession gave this company great success.

Also, does anyone happen to know why the fall in their SP since the start of the year?

newacc2015

A majority and seriously something like 70-90% of M&A's are unsuccessful. Companies are too different to merge, management isnt adaptive to change and even in the case of Miracle-Gro and Scotts, one party was cooking the books. Most companies that merge or are taken over were better off as a single company

Generally if the shareprice drops after the announcement of a M&A you can tell whether or not the market believes the M&A is giving value to shareholders. SP is probably dropping as all Irish companies heavily exposed to the UK are taking a hammering. Betfair is taking a hammering as it is a British company. Depending on the deal on the table, Paddypower may go back and ask for a reduce in the price of Betfairs shares as they are overvalued to the drop in GBP and because the UK economy isnt too rosy

Here is an interesting HBR on M&As
https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook

Frank101

newacc2015 wrote: »

A majority and seriously something like 70-90% of M&A's are unsuccessful. Companies are too different to merge, management isnt adaptive to change and even in the case of Miracle-Gro and Scotts, one party was cooking the books. Most companies that merge or are taken over were better off as a single company

Generally if the shareprice drops after the announcement of a M&A you can tell whether or not the market believes the M&A is giving value to shareholders. SP is probably dropping as all Irish companies heavily exposed to the UK are taking a hammering. Betfair is taking a hammering as it is a British company. Depending on the deal on the table, Paddypower may go back and ask for a reduce in the price of Betfairs shares as they are overvalued to the drop in GBP and because the UK economy isnt too rosy

Here is an interesting HBR on M&As
https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook

Thanks

AdMMM

The share price of both companies jumped around 33% on news of the merger, so the market clearly thinks that the two companies were suited to merge. The market obviously priced in the potential efficiencies there and then and some adverse sports results in Q1 as well as an expensive redundancy program brought into question whether or not they'd hit their targets for the full year, resulting in a drop in share price. Q2 sporting results have been massively in their favour (as seen by Ladbrokes Q2 commentary which the entire industry would share) so I don't think targets for the year are now in doubt.

A substantial amount of revenue is also generated through the Australian arm of the business where they're the market leaders, so the drop in value of sterling should help there as well as benefitting from the additional revenue from the "grey" markets that Betfair operates in.

I think H1 results are going to be quite positive and the company is in one of the better positions to overcome the hurdles of regulation in countries but that's always going to be a big risk as countries continue to look for ways to create more points of taxation.

AdMMM

Was expecting bit more of an uplift following today's H1 announcements - in fact I think it's actually trading down as of now. One year ahead of plan to deliver cost-efficiencies and yet more growth that's beating the floundering market.