London-listed betting and gaming operator Paddy Power Betfair has acquired an initial 51 per cent controlling stake in Georgian online operator Adjarabet for £101m.

The company said that the acquisition enhances the diversification of its European online business, providing the group with exposure to two fast-growing markets.

Adjarabet is the leading online operator in Georgia’s regulated market with an estimated 40 per cent share, and also has a growing presence in the developing regulated Armenian online market, achieving a 10 per cent share of the market by the end of 2018.

Paddy Power Betfair has agreed to pay an initial cash consideration of £101m for the majority stake in Adjarabet. A mechanism has also been agreed, consisting of call and put options, which enables the company to acquire the remaining 49 per cent stake in the business after three years at a valuation equivalent to 7x 2021 EBITDA.

Last year, Adjarabet generated revenue of 215m Georgian Lari (GEL) (£64m) and EBITDA of GEL68m (£20m).

Paddy Power Betfair said that the combination of the market-leading Adjarabet brand and local operational expertise with its own technology and leading sports capabilities would position Adjarabet "very well" to capitalise on opportunities in the two regulated markets.

“This bolt-on acquisition is in line with our strategy of establishing podium positions in attractive online markets,” said Paddy Power Betfair chief executive Peter Jackson. “Adjarabet's leading brand presence and strong management team has established it as the clear number 1 in the fast-growing, regulated online Georgian market.

“Together with our group's technology and sports capabilities, we are confident that Adjarabet will be strongly positioned to continue to build on this success.”

Shares in Paddy Power Betfair plc (LSE:PPB) were trading at 6,265.00 pence per share in London Friday morning.