Monday 27 January 2020

Betfair resists €1bn takeover bid as restructure goes to plan

John Mulligan

John Mulligan

UK betting exchange Betfair – which is headed by former Paddy Power executive Breon Corcoran – has positioned itself to repulse a €1bn-plus takeover attempt by releasing a solid trading update.

Shares in the company rose after it said that revenue and profits in the financial year that ended in April were ahead of even the top end of expectations.

The company – which is undergoing a strategic restructuring under Mr Corcoran's leadership – has recently drifted into the sights of private equity giant CVC and two other principals including an existing Betfair shareholder, Richard Koch.

They've made a £912m (€1bn) indicative offer to buy the company. Betfair has rejected the advance, saying it undervalues the company.

Its shares had hit £8.58 by yesterday afternoon. That's still lower than the £8.80 that CVC said it would be willing to put on the table.

In a trading update, Betfair said that revenue in the financial year just ended was £387m (€458m), which was ahead of its guidance.

It added that the result was driven by stronger than expected UK sportsbook revenues, particularly via its mobile channel, and "revenue resilience in countries where we have ceased marketing".

Group underlying earnings before interest, tax, depreciation and amortisation was also higher than guided, at £73m (€86.3m).

"The business has gone through significant change," said Mr Corcoran, who's been chief executive at Betfair since August last year.

"A new management team is in place and a wide-ranging restructuring has been completed ahead of schedule, allowing us to increase our cost savings substantially.

"At the same time, the pace of product delivery has accelerated, including the development and launch of a new sportsbook within three months."

Mr Corcoran said Betfair is "rightly focusing" on regulated jurisdictions – mainly the UK and Ireland, but said there is a "significant international opportunity" for the company.

"We have recently seen positive regulatory momentum in Italy, Spain and the USA," he said. "In addition, revenue from the countries where we have ceased marketing is proving relatively resilient due to the uniqueness of our exchange."

Some analysts have questioned Betfair's previous strategy and momentum. The company has pulled out of Germany and Greece in recent months. It has also withdrawn from Canada, Russia and other countries that accounted for about 24pc of its revenue.

Irish Independent

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