Paddy Power acquires sports company Draft2017-05-11 13:00:00
Paddy Power recently announced their acquisition of Draft, a fantasy sports company. This cost Paddy Power a cool €17 million to finalise the deal. It is a significant acquisition for the powerhouse bookmaker as it is the company’s first venture into the fantasy sports market in America.
Depending on how the business performs, Paddy Power plans to pump in a further €26 million over the next four years. The company forecasts an earnings loss of around €18 million before interest, depreciations, and taxes come into play.
A bold step into the American market
“Draft has a differentiated product and we believe the business, with the support of our marketing and technology expertise, can take share in the fast-growing daily fantasy sports market,” said Breon Corcoran, chief executive of Paddy Power Betfair.
In a note to investors, analysts at Davy said: “We see this acquisition as a relatively modest bet on the future of the daily fantasy sports market in the US. It provides the group with optionality around the future of this tangential product space in the US and elsewhere and could add to the diversification of the group over time.” This investment may cause a dip in earnings for the company by around 3 per cent. Davy also stated that “However, the market opportunity is such that this dilution could represent a small price to pay for longer-term returns”.