Deadline looms for CVC to renew Betfair bid
Private equity group has until 5pm today to make improved bid after initial approach was rejected
Formula 1 owner CVC Partners has less than six hours to make an improved bid to take Betfair private after last month’s approach was dismissed by the London-listed operator.
Today’s 5pm deadline comes three weeks after Betfair rejected a preliminary offer proposal valuing the business at more than £910m and the requisite 28 days after CVC made public its “early stage talks” over a potential acquisition. Betfair claimed last month’s 880p a share offer “fundamentally undervalues” the company.
A spokesperson for Betfair was unable to comment when contacted by eGaming Review this morning, however eGR understands any possible extension of the deadline would need to be with the involvement of Betfair itself, as per the rules of the Takeover Panel.
Analysts have suggested CVC would need to increase its offer to £10 a share to emerge successful, particularly in the light of Betfair’s trading update last week which saw FY 2013 revenue projections come in ahead of guidance estimates at £387m.
“We would expect CVC to come forward with a higher priced approach to reflect the extra value in the core business highlighted by yesterday’s update,” Simon French of Panmure Gordon said in a note last week.
“We appreciate new management didn’t want to make too many promises too early, but CVC forced its hand and investors should welcome this,” said analyst Nick Batram of Peel Hunt, however he noted “it is still early days”.
Less than a year has passed since the arrival of Betfair chief executive Breon Corcoran, however Batram cited “three key positives” from last week’s update which suggest “CVC will have to significantly up its bid if it wants to secure Betfair”.
Among these three positives is the fact that Betfair looks poised to invest a portion of its £168m cash balance on further acquisitions rather than returning cash to shareholders. Corcoran pledged to follow last month’s acquisition of Blue Square Bet with “targeted acquisitions” in order to “add further domestic scale, achieve geographical expansion and close product gaps”.