Betfair considering massive payout to shareholders

Gambling website Betfair was today said to be mulling a £140m (€166.2m) payout to shareholders as part of its defence against a hostile takeover.

It has already rejected a bid proposal from CVC Capital Partners, which is the buyout group behind Formula 1 motor racing, on the grounds that the £910m (€1.08bn) approach undervalued its business and prospects.

But with CVC having until May 13 to table a formal bid, the Sunday Times said 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 on Tuesday 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 says it is going through one of the "most exciting phases in its development", thanks to a new strategy revealed in December and the appointment of a new management team led by chief executive Breon Corcoran.

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."

Betfair's share price stood at 1300p on its stock market debut in 2010.

CVC owns luggage firm Samsonite and also has stakes in Brit Insurance and theme park giant Merlin Entertainments.

It has been working with existing Betfair shareholder and entrepreneur Richard Koch and private equity investor Antony Ball about a possible joint approach for the online betting exchange.