CVC Partners in talks to take Betfair private
Formula One owner in "early stage" discussions, less than three years after operator went public.
Private equity group CVC Partners has confirmed that it is in early stage talks to launch a bid for Betfair.
CVC, which owns Formula One, has until 5pm on 13 May to announce a firm intention to launch a bid which would see the London-listed operator taken private less than three years after its October 2010 IPO.
In a statement to the London Stock Exchange this morning, CVC noted it “keeps a wide range of opportunities under regular review”, adding that “it has had preliminary discussions with [Betfair investors] Richard Koch, Antony Ball and partners regarding options in respect of Betfair”.
Betfair “strongly advised” shareholders to take no action, saying in a statement to the Stock Exchange “There can be no certainty that an offer will be made or as to the terms on which any offer might be made”.
With our new team now in place and the announcement of a more focused strategy in December, I believe Betfair is currently going through one of the most exciting phases in its development,” chairman Gerald Corbett said.
“Our management team is actively implementing the new business plan for the company and we remain fully committed to delivering on the new strategy and providing improved returns for our shareholders,” Corbett added.
The interest from CVC comes less than a year into the tenure of new Betfair CEO Breon Corcoran (pictured), who arrived from Paddy Power last August, and follows the operator’s withdrawal from a number of jurisdictions including Germany, Greece and Cyprus.
It has since taken over selected assets of former Rank Interactive brand Blue Square for £5m, and recently saw profits from its recently launch fixed-odds sportsbook offering rise by 39% year-on-year to £7.5m.
Betfair first floated on the London Stock Exchange in 2010, with the company at the time valued at £1.5bn, with then-CEO David Yu saying at the time that the float would give the operator “greater flexibility to react to wherever the industry goes”.
The company’s share price at the time was £15.50, but dropped to a low of 567p in 2011. It has risen by 11% today, and sits at 775.50p at the time of writing.
Analyst Nick Batram of Peel Hunt issued a ‘Hold’ recommendation on Betfair’s shares this morning, saying “The interest from CVC looks like good opportunistic timing but whether a full bid will materialise is difficult to say at this stage.”
Barclays’ corporate and investment banking division, which is providing corporate broking services to Betfair as part of the potential takeover offer, has temporarily suspended all ratings, estimates and price targets on the company.