CVC abandons the idea of taking over Betfair
The potential takeover of Betfair collapsed on the 14th of May, when CVC Capital Partners dropped its offer due to the failure of reaching an agreement with the gambling company. On the 10th of May, CVC made an improvement on the price of 880 pence offered initially on the 22nd of April, but have been rejected again.
Further offers were made, the price going up to 920 pence and even 950 pence on the 12th of May, but Betfair rejected again, since the price “undervalues the company and its attractive prospects”.
CVC refused to consider another increase to the offered price and confirmed that it is very unlikely for them to agree on the financial terms with Betfair and hence the takeover was abandoned.
The Chairman of Betfair, Gerald Corbett revealed that: “The board has spent considerable time assessing the various proposals, including detailed discussions with the co-offerors. The board concluded that none of the proposals represented adequate value for acceptable execution risk.”
Before the last raise of the bid, Betfair made an update on the business strategy that the company currently uses public.
“A new management team is in place and a wide ranging restructuring has been completed ahead of schedule, allowing us to increase our cost savings substantially”, Breon Corcoran, the chief executive of Betfair, announced. This was made possible by reducing a substantial part of the workforce, namely 500 employees. “The revenue estimated for the last financial year, which ended on the 30th of April is about £387m”, added Corcoran.
“Under the new direction of Breon Corcoran and his management team the board believes that Betfair is making excellent progress in the implementation of its strategy with momentum building from early success. The board remains confident in the continued delivery of this policy and the company’s outlook and growth prospects”, said Gerald Corbett.
Currently, Betfair is strengthening its position on the online gambling market. However, if in 2010, their shares were estimated to accumulate to about £13, today they are trading at 843.1 pence, on a volume of 97,351 shares on the London Stock Exchange.
“In our view, CVC were stretching the realms of realistically making a significant return on investment at the top level”, said analyst James Hollins of Investec. “This leaves Betfair as a listed entity undertaking a turnaround (cost-cutting, product development) in the public glare”, he added.