Let's have a bet - a new CEO for Paddy Power?Wednesday, Aug 9, 2017 07:36
We recently reported on Paddy Power being downgraded by London-based banking and asset management group Investec. Paddy Power Betfair shares are set to fall further when trading at the London Stock Exchange opens today. The drop in share prices comes as a result of rumours emerging over the weekend that Paddy Power Betfair seeks to appoint a new CEO. The new CEO will replace Breon Corcoran who has been in his role as CEO at Paddy Power Betfair ever since the two companies, Paddy Power and Betfair, merged a year ago.
Who is Breon Corcoran?
Breon Corcoran is an Irish businessman who worked for numerous businesses, including JP Morgan and Bankers Trust before joining Paddy Power in 2001. He joined the gambling giant to develop the company's non-retail business. Corcoran became a board member after merely three years at the company and rose to COO in August 2010. He then quit Paddy Power and joined UK-based Betfair. In 2016, he sold part of his shares in Betfair for £4.1 million. Some sources are suggesting that Corcoran may have indicated that he wanted to leave Paddy Power Betfair and that this is the reason why the company is looking for a new CEO.
Potential candidates to replace Paddy Power's current CEO
According to a report by Sky News, Paddy Power is headhunting for a new CEO. The company has been in contact with head-hunting firm Spencer Stuart. The hunt for a new CEO is being led by one man, Paddy Power chairman Gary McCann.
“Post the merger, many senior management positions were filled with Betfair personnel, making reports of a CEO departure all the more surprising,” commented David Holohan, chief investment officer at Dublin-based Merrion Capital.
In light of Corcoran's potential departure, it is not clear whether or not the post will be filled by a former Betfair personnel as had become the tradition under Corcoran.
Most likely result = share prices falling
Paddy Power Betfair will announce its first-half earnings on Tuesday. According to Goodbody Stockbrokers, the group's earnings have risen by 27 per cent to £230 million (€255 million) year-on-year. The positive development, however, may not suffice to counteract the negative impact speculation of Corcoran's exit from Paddy Power management is expected to have.
“A key attraction of the of the Paddy Power Betfair merger was to bring Breon Corcoran back to Paddy Power, given his enormous success with Betfair,” explained Holohan.
Holohan believes that speculation over a new CEO at Paddy Power "won't be taken well" by investors. Investors, he believes, will seek immediate clarification. Yet, in the long-term, share prices of Paddy Power Betfair are expected to rise. More and more investors are starting to see the potential returns of investing in gambling stock. While some investors may be concerned about the tightening of gambling legislation in Europe, the majority of investors are paying close attention to Paddy Power's aggressive expansion into non-European markets.
Paddy Power is currently targeting the US market. The group recently bought a US-based fantasy sports company and continues its search for further investments in the region. In sum, Paddy Power Betfair stock may fall but should be able to recover, with or without Corcoran.