Paddy Power Betfair Deals Blow to Investors as CEO to Leave

(Bloomberg) -- Paddy Power Betfair Plc said Chief Executive Officer Breon Corcoran is stepping down, dealing a blow to investors only 18 months after the betting giant was created by a merger.

Corcoran, 46, will be succeeded by Peter Jackson, the U.K. head of financial technology firm Worldpay Plc, according to a statement Monday. Jackson, 41, already knows the Dublin-based company, where he’s a non-executive director.

Corcoran’s unexpected departure creates new doubts at a time when Paddy Power Betfair faces multiple challenges to its growth prospects. Competition in the online betting industry is tougher than ever, while companies also face increasing regulatory and tax burdens. The shares fell as much as 8.6 percent in London, extending a 25 percent drop since last year’s merger of Paddy Power bookmakers and the Betfair betting exchange.

“The timing is certainly less than ideal given the particularly noisy regulatory backdrop,” David Jennings, an analyst at Davy Stockbrokers, said in a note. Corcoran’s decision “has come earlier than most would have expected.”

Jackson is set to leave Worldpay only five months after joining from Banco Santander, where he was head of global innovation. More recently, Worldpay agreed to be acquired by U.S. payment processing company Vantiv Inc.

The appointment was unanimously approved by Paddy Power Betfair’s independent directors following a “rigorous and extensive” search process that was led by executive recruiter Spencer Stuart. The company didn’t give a reason for Corcoran’s departure.

The outgoing CEO said it had been a “very difficult” choice to step down. “There is never a good time to leave, but this is the right decision for me and my family, and following the successful completion of the merger integration it is an opportune time for the business too,” he said in the statement.

The timing of the changeover is unclear, with Jackson’s start date to be “confirmed in due course,” the company said. Corcoran, who has worked with the Paddy Power and Betfair businesses for the last 16 years, will stay on until his successor is in place. Both Jackson and Corcoran have contracts that stipulate 12-month notice periods.

The announcement came a day before Paddy Power Betfair reports first-half results. Those will show revenue growth of 9 percent and a 21 percent increase in underlying earnings before interest, tax, depreciation and amortization, the company said. It also forecast full-year Ebitda of 445 million pounds to 465 million pounds ($581 million to $607 million), up from the prior year’s 400 million pounds. The average analyst estimate is about 462 million pounds, according to data compiled by Bloomberg.

The guidance looks to be “broadly in line with expectations,” Davy’s Jennings said.

To contact the reporters on this story: Paul Jarvis in London at pjarvis@bloomberg.net, Luca Morreale in London at lmorreale2@bloomberg.net.

To contact the editor responsible for this story: Eric Pfanner at epfanner1@bloomberg.net.