Betfair rejects £910m CVC bid

Betfair, a London-listed online betting platform, has rejected a £910 million (€1.06 billion, $1.3 billion) bid by UK-based CVC Capital Partners. 

Submitted last Friday, the cash and share offer valued Betfair shares at 880p. That represented a 9 percent premium on the day’s closing price, and a 25 percent premium on the price quoted before CVC announced its intention to bid for the company. 

Betfair’s board announced it had declined the offer Monday, on the ground that it undervalued the business and its future opportunities. “We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise,” said Gerald Corbett, chairman of Betfair, in a statement Monday. 

Betfair allows gamblers to bet against each other online

This was despite the proposal having the backing of two of Betfair’s key shareholders, Anthony Ball and Richard Koch, who together own 6.5 percent of the business. 

Betfair initially went public in October 2010 at the price of £13 a share, but the company has lost almost half of its value since then. It reported a loss of £64 million for the six months to 31 October 2012, and a 4 percent decrease in revenues in the three months to 31 January 2013. 

Founded in 1999, Betfair operates an exchange platform that enables gamblers to bet against each other rather than through a traditional bookmaker. 

The company announced a change in strategy last December, choosing to focus on regulated markets such as the UK, Ireland, Denmark and Australia and closing its German and Greek operations. It is reportedly thinking of leaving other markets, including Cyprus and Russia. 

We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise. Gerald Corbett

The group has already engaged in a series of cost-cutting efforts, reducing the number of languages it uses on its website and laying off more than 50 staff out of its 1,000-strong workforce. 

CVC confirmed it was considering a bid for Betfair last week, having held discussions with Ball and Koch so as to put together a joint offer to take the company private. 

“Our new management team are implementing the strategy announced in December 2012 and it is this that will realise value for shareholders.” Corbett said. “We will provide an update to the market on 7 May 2013 to set out the good progress we are making in the implementation of our strategy, including cost efficiencies, and our recent trading performance.”

The failed bid for Betfair comes just a few days after CVC acquired a majority stake in Ista, a German metering business, in a transaction reportedly valuing the company at around €3.1 billion.

The deal is Germany’s largest buyout since 2008, and one of Europe’s biggest secondary transactions since the financial crisis. It allows CVC to regain control of a business it sold to Charterhouse in 2007 for €2.4 billion, having first bought Ista in 2003 for €930 million.