Private equity firm seeks Betfair buyout
Last last night SKY news broke a story about CVC approaching Betfair: –
https://news.sky.com/story/1077839/exclusive-cvc-mulls-750m-gamble-on-betfair
I think this would make a good target for a firm like CVC, but whether they can pull it off is another thing; they would require the buy in of all major shareholders. The rationale for a private equity buyout would probably be along the following lines. Betfair is cash rich and a private equity firm would probably use that cash as part of the buy out process and re-leverage the company. From a valuation perspective, the cash plus future earnings from a much leaner organisation would probably allow a re-float at some point in the future with a reasonable ROI. I would imagine there would be a lot of changes. Out of the public ownership light they could achieve this as owners.
Betfair has performed very poorly since coming to market and have pretty much thrown away the strategy in the prospectus and lost a lot of senior management. So it’s not surprise to see the price floundering and buy outs being muted. But from the perspective of somebody how caught the bottom of the decline to become a shareholder, I’d hope for a much better valuation.
Let’s see what happens when the market opens on Monday.
Category: Betfair
