Gambling website Betfair is thought to be mulling a £140 million payout to shareholders as part of its defence against a hostile takeover.
The firm has rejected a bid proposal from CVC Capital Partners – the buyout group behind Formula 1 motor racing – on the grounds that the £910m approach undervalued its business and prospects. CVC has until 13 May to table a formal bid.
Reports yesterday indicated a one-off return of cash might appease investors unhappy with Betfair’s dismal share price performance over the last three years. Betfair is due to publish a trading update tomorrow but may opt to keep the payout option in reserve until CVC turns up the pressure.
The company’s betting exchange works by matching punters and allowing them to bet against each other, which it says eliminates the need for a traditional bookmaker. It charges a commission on the bets.
The company processes seven million transactions a day and said it is going through one of the “most exciting phases in its development”, thanks to a new strategy revealed in December.
Rejecting CVC’s original 880p-a-share takeover approach, chairman Gerald Corbett said last month: “We have a unique business with a market position, profitability, cash flow and prospects that this proposal fails to recognise.”