Betfair rejects £900m CVC offer
Operator claims preliminary proposal from private equity group CVC Partners "undervalues" company
Betfair’s board has rejected a preliminary offer proposal worth more than £900m from private equity group CVC Partners, claiming it “fundamentally undervalues” the company and its “attractive prospects”.
“We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise,” Betfair chairman Gerald Corbett (pictured) said. “Our new management team are implementing the strategy announced in December 2012 and it is this that will realise value for shareholders,” he added.
The preliminary proposal valued the London-listed business at 880p a share, and followed early stage discussions last week between CVC and Betfair investors Richard Koch and Anthony Ball. If approved it would have taken the company – which currently trades at 805p a share – private less than three years after it initially floated on the London Stock Exchange.
The Board of Betfair has reviewed the Proposal with its advisers and rejected it on the basis that it “fundamentally undervalues the Company and its attractive prospects, and is highly conditional,” Betfair said in a statement. Following the announcement of initial talks last week, Corbett had stressed his belief that Betfair was currently going through “one of the most exciting phases in its development”.
Corbett noted that the operator would update the market on 7 May regarding “The good progress we are making in the implementation of our strategy, including cost efficiencies, and our recent trading performance”.
Nick Batram, analyst with Peel Hunt, issued a ‘Hold’ recommendation on Betfair shares, describing the CVC offer as “an interesting starting point”.
Batram acknowledged the risk that CVC considers itself “a potential stalking horse for an industry buyer”. However he recognised that, were the Formula One owner to withdraw, “[While allowing] an industry player [to] bide its time… this would still leave Betfair as a more interesting story than it was prior to the offer.”