This story is sponsored by Betfair
Formula One owner CVC Capital Partners is holding preliminary talks with investors regarding a potential buy-out of London-listed betting exchange operator Betfair.
Betfair emphasised in a statement this morning that there was no certainty an offer would be made, advising shareholders to take no action. Shares in the group rose by 14% in early trading this morning following a report by Sky News over the weekend.
The betting exchange has endured a torrid start to life as a public company since it floated at £13 a share in October 2010, valuing the company at around £1.4bn. The shares hit a 52-week low of £6.44 in January of this year, trailing speculation it was ripe for a takeover bid.
New boss Breon Corcoran, headhunted from Paddy Power in 2012, announced a programme of cost-cutting and restructuring in December aimed at restoring the company’s fortunes. Initiatives included a reduction in headcount, the sale of non-core assets, such as financial betting platform LMAX and its stake in social gaming company Kabam, and its effective exit from all unregulated “grey” territories.
Revenues fell 4% to £90.5m in the last quarter as the business was buffeted by regulatory shifts in key markets such as Greece, German, Cyprus and Spain and its withdrawal of marketing spend from dot.com territories representing 16% of revenues, such as Canada, Norway and Russia, as well as several Asian and Latin American countries.
In a statement regarding the press reports this morning, Betfair chairman Gerald Corbett said that with the new management team and strategy in place since December, he believed the group was now “going through one of the most exciting phases in its development. “
CVC subsequently told Reuters that the bid could include an offer by funds advised by CVC alongside investors Richard Koch and Anthony Ball and other partners. Founders Andrew Black and Ed Wray still own around 20% of the stock.
Article written by Katy Stirland
