* 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 (Reuters) - 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, without elaborating.
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 rates punitive.
“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.
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 company.
“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