CVC Partners is currently in discussions with Betfair to takeover the popular betting exchange, which would transform the publicly-listed company into a private entity.
A deadline of May 13 at 5:00 p.m. has been given to CVC in which to place a bid for Betfair, whose initial public offering ocurred less than three years ago in October of 2010.
In a statement distributed by CVC to the London Stock Exchange, a CVC spokesperson said that the company typically “keeps a wide range of opportunities under regular review” and that the acquisition of Betfair is one of those options.
Betfair countered with a statement of its own, advising shareholders to stand pat because there is “no certainty that an offer will be made.” A buyout would likely result in a windfall for both Betfair shareholders and management.
CVC’s interest in Betfair follows a restructuring of the company that included the hiring of CEO Breon Corcoran last August and the departure of Betfair from various unstable markets such as Cyprus and Greece. Betfair has also recently taken over certain assets of Rank Interactive’s Blue Square Bet for £5 million.
“Betfair is currently going through one of the most exciting phases in its development,” chairman Gerald 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.”
Betfair was valued at £1.5 billion when made available on the London Stock Exchange in 2010. Its share price was £15.50 at the time, but fell to 567p in 2011. It currently trades at 775p, an increase of 11%.
CVC Partners holds investments in both Samsonite and Formula One. A buyout of Betfair would allow the betting exchange to undergo less reporting and regulation requirements, permitting the operator to better focus on particular long-term goals instead of managing earnings in the short term. However, going private would mean that Betfair could not raise additional money by issuing more stock and would also lose the brand equity associated with being listed on the London Stock Exchange.