Following some disappointing results in trading on the London Stock exchange after being floated three years ago, online betting exchange Betfair could be the target of a takeover. CVC Capital Partners, who are a private equity firm who are the buy-out group behind Formula One racing, said they have been considering making a bid for the betting exchange. They have apparently been holding talks with investors Anthony Ball and Richard Koch, the latter being an entrepreneur and existing shareholder in Betfair.
Betfair are valued around £800 million, but their trading has seen them fall well below the £13 that they are listed as per share. When it was first introduced to the London Stock Exchange, Betfair was worth around £1.4 billion, but a lack of direction has seen them fall below some of their main competitors.
The betting exchange was established back in 2005 in Malta, and the popular platform of betting against other punters as opposed to using a traditional bookmaker, made the site hugely popular. The growth of Betfair led them to win several awards for their innovative technology, but critics say that they are hurting because of not defining themselves as a technology company or a betting site.
Other factors effecting the value of Betfair has been their determination to tighten their focus in properly regulated territories. They have already pulled out of Germany and Greece because they are markets which have legal grey areas, and the betting exchange wants to concentrate its effort on clearly defined and regulated territories. This has naturally cost them, because their withdrawal so far has already cut around a quarter of their regular profits from their books, so the decisions have come at a big cost.
But Betfair chairman Gerald Corbett said the company is going through one of the ‘most exciting phases in its development’, thanks to a new strategy revealed in December, and has overhauled its management team, headed by chief executive Breon Corcoran.
Mr Corbett said: ‘Our management team is actively implementing the new business plan for the company and we remain fully committed to delivering on the new strategy and providing improved returns for our shareholders.’
CVC said they were considering the option of “an offer for Betfair by funds advised by CVC together with Richard Koch, Anthony Ball and partners’. But there has been no firm word as to whether or not they would push ahead yet with a deal, but analysts suggest that a takeover is “not inevitable.”
