Betfair Rejects $1.38bn Takeover Bid By CVC

Online betting exchange Betfair has rejected a $1.38 billion (£910m) takeover bid by CVC Capital Partners, arguing that the offer greatly undervalued the value of the company. If the proposal had been accepted, a new company would have been created and new shares issued.
The preliminary offer valued Betfair shares at 880 pence each, despite the stock currently trading at 841p. However, company shares are still well below the £13 they first traded for after going public in October 2010.
Private equity firm CVC Capital Partners made the bid together with a group of other investors, including Antony Ball and Richard Koch, a co-founder of LEK Consulting who already holds a 6.5% stake in the betting exchange. Commenting on the proposal made by CVC Capital Partners, Peel Hunt analyst Nick Batram, said: “CVC’s opening gambit, while not a knock-out bid, is not too far away from a valuation that would cause management and investors cause for serious consideration.”
Betfair may have reported a £64 million loss for its most recent six month results up to October 31st, but the market is still growing and the company is now implementing a change of strategy to revive its flagging stock price. Consequently, Betfair has withdrawn from certain unregulated markets such as Greece and Germany, in order to concentrate on regulated online gaming markets such as the UK, Ireland, Denmark and Australia.
As Betfair chairman,Gerald Corbett, said Monday after the takeover bid was rejected: “We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise. Our new management team are implementing the strategy announced in December and it is this that will realise value for shareholders.”