Betfair reject £900m takeover offer
Betfair came out this morning and rejected an offer by CVC of 880p per share. With 103m shares in issue, that values Betfair at roughly £900m. Betfair shares closed at 800p on Friday so expect another jump up today.
Mark Davis had some interesting reflections on the offer on his blog. His comments are always worth a look as he is a big shareholder and obviously an insider on the whole Betfair thing. He has often given insight to the whole inner workings of Betfair and its overall philosophy at certain stages of its development. The posts always make for an interesting read.
Rejecting an offer is quite common on the stock market. Chairman Gerald Corbett is an old hand at such matters and posturing in the face of a suitor is not unexpected, even if it is only to solicit a larger offer. Given that the shares were a high of £13 around floatation, £9 is quite a difference, but then the flotation prospectus is a utter relic now.
Corbett came out with the following statement: –
“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 2012 and it is this that will realise value for shareholders. 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.”
Betfair wrote off a lot of money when they installed the new management team so the next set of results are going to be really flattered by the write offs. Whether the strategy to ‘hide’ the exchange part of their business, the vital and key element of their business, from the general public view is a sensible strategy remains to be seen. I think a lot of people are starting to see the effect this is having on the exchange model. I still maintain a two tier strategy would have worked much better. Interesting times.
I bought Betfair shares at their low point so all this fuss is most welcome from my perspective. I’ll continue to follow it with interest. I’m familiar with how CVC work so not sure if a takeover would be a good or bad thing at this stage. But then I’m not convinced Betfair are on the right path as it stands anyway.
Category: Betfair, Industry news
