Vol. 7 • No. 19 • May 25, 2009 - Print This Issue
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Vol. 7 • No. 19 • May 25, 2009, GOODS & SERVICES
Paddy Power Enters Australian Market
Paddy Power buys controlling interest in one of Australian largest corporate bookmakers, Sportsbet.
Irish bookmaker Paddy Power announced last week that it had acquired a 51 percent stake in one of Australian largest corporate bookmakers, Sportsbet.
Paddy Power will initially pay US$48.5 million to acquire the interest in Sportsbet, followed by a cash payment of US$45.8 million from the company's existing cash reserves and the issue of 100,000 Paddy Power shares to Sportsbet shareholders.
An additional cash consideration of US$10 million will become payable to Sportsbet shareholders in early 2010 if Sportsbet's EBITDA during 2009—before transaction and restructuring costs—exceeds US$16.5 million. Sportsbet reported EBITDA of $7.9 million last year on turnover of $878 million. The company has forecast EBITDA of $14.6 million for the year ending June 30 2009.
Under the terms of the acquisition, if Sportsbet’s EBITDA for any of the years 2010, 2011 or 2012 is less than $11 million, Paddy Power will have the right to take equity from Sportsbet’s existing shareholders on a proportionate basis to the shortfall in profitability.
In addition, Paddy Power has a call option, exercisable in either 2012 or 2013, to acquire all of the outstanding shares in Sportsbet that it does not own, with the exercise price to be determined based on an EBITDA multiple of 5 to 7 times, depending on the level of EBITDA.
In the event that Paddy Power elects not to exercise the call option, the minority shareholders in Sportsbet will have the option to acquire Paddy Power’s shareholding.
Commenting on the acquisition, Patrick Kennedy, CEO of Paddy Power, said, "This business is an excellent fit with Paddy Power. Sportsbet has a strong, well run business together with plenty of potential to build on its market position in Australia.
"The acquisition adds a new dimension to our business portfolio to which we can bring trading, risk management and marketing expertise honed in Ireland and the U.K. to complement Sportsbet’s existing skills and experience."
Paddy Power will initially pay US$48.5 million to acquire the interest in Sportsbet, followed by a cash payment of US$45.8 million from the company's existing cash reserves and the issue of 100,000 Paddy Power shares to Sportsbet shareholders.
An additional cash consideration of US$10 million will become payable to Sportsbet shareholders in early 2010 if Sportsbet's EBITDA during 2009—before transaction and restructuring costs—exceeds US$16.5 million. Sportsbet reported EBITDA of $7.9 million last year on turnover of $878 million. The company has forecast EBITDA of $14.6 million for the year ending June 30 2009.
Under the terms of the acquisition, if Sportsbet’s EBITDA for any of the years 2010, 2011 or 2012 is less than $11 million, Paddy Power will have the right to take equity from Sportsbet’s existing shareholders on a proportionate basis to the shortfall in profitability.
In addition, Paddy Power has a call option, exercisable in either 2012 or 2013, to acquire all of the outstanding shares in Sportsbet that it does not own, with the exercise price to be determined based on an EBITDA multiple of 5 to 7 times, depending on the level of EBITDA.
In the event that Paddy Power elects not to exercise the call option, the minority shareholders in Sportsbet will have the option to acquire Paddy Power’s shareholding.
Commenting on the acquisition, Patrick Kennedy, CEO of Paddy Power, said, "This business is an excellent fit with Paddy Power. Sportsbet has a strong, well run business together with plenty of potential to build on its market position in Australia.
"The acquisition adds a new dimension to our business portfolio to which we can bring trading, risk management and marketing expertise honed in Ireland and the U.K. to complement Sportsbet’s existing skills and experience."
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