* Talks founder over price, strategy
* Betfair rejected improved 950 pence a share proposal
* Pressure on Betfair to deliver on strategy
* Betfair shares fall 3.5 percent
(Recasts with shares, analyst reaction)
By Anjuli Davies and Keith Weir
LONDON, May 14 Private equity firm CVC Capital
Partners has ended a 1 billion pound ($1.5 billion) attempt to
buy online betting exchange Betfair after the two
companies failed to agree on price and strategy.
Betfair shares fell 3.5 percent to 864 pence on Tuesday
after the company said it had rejected an improved 950 pence a
share bid proposal from CVC, the largest shareholder in Formula
One motor racing.
The Betfair board had been reportedly seeking more than 10
pounds per share. The company, whose shares debuted in 2010 at
13 pounds, said attempts to negotiate a higher bid, after it
rejected the proposal made on Sunday, foundered over strategy,
The failure of talks which began last month will increase
pressure on recently installed Betfair CEO Breon Corcoran to
deliver on a plan to cut costs and pull back from markets such
as Greece and Germany where regulatory risk is too high or tax
"In our view, CVC were stretching the realms of
realistically making a significant return on investment at the
top level," said analyst James Hollins of Investec, referring to
the private equity firm's improved takeover proposal.
"This leaves Betfair as a listed entity undertaking a
turnaround (cost cutting, product development) in the public
glare," he added.
FLOAT EUPHORIA FADED
Betfair stock was trading at 700 pence before CVC said on
April 15 it was considering a bid.
Since Betfair listed in 2010, the stock has tumbled.
Analysts said the company had failed to clearly identify whether
it was a technology or gambling business.
Betfair's technology allows gamblers to bet online against
one another at their own prices. It is also offering more
conventional sports betting with odds set centrally to compete
with rivals in an expanding yet highly competitive sector.
CVC's strategy is normally to seek an agreed deal and leave
existing management in place to deliver on strategy.
The firm, which bought British bookmaker William Hill
in 1999 before selling it three years later, is often
reluctant to pursue hostile bids to take companies private.
CVC and its consortium partners, investors Richard Koch and
Antony Ball, had raised their bid proposal twice from the 880
pence per share mooted on April 22, first to 920 pence last
Friday and then to 950 pence on Sunday, Betfair said.
As part of its defence, Betfair raised profit and revenue
forecasts in a trading statement rushed out last week after its
financial year ended in April.
Corcoran, hired from Irish bookmaker Paddy Power, has
impressed analysts in his first few months in the job. Some said
the CVC approach had highlighted the potential value of the
"In our view, that underlying value will be realised over
time by the current strategy," said Ivor Jones of Numis.
($1 = 0.6517 British pounds)
(Editing by Mark Potter)