Betfair Group Plc, a U.K.-based online gambling operator, rose the most in two-and-a-half years today after CVC Capital Partners Ltd. said it has held talks regarding a possible offer for the company.
The shares rose 12 percent, the biggest gain since October 2010, to 782 pence at the close of trading in London. Traded shares exceeded 490,000, more than double the three-month daily average.
CVC said today it has held preliminary discussions with investors Richard Koch, Antony Ball and partners “regarding options in respect of Betfair, which could include an offer.” The deadline for a firm intention is May 13 and it isn’t certain any offer will be made, CVC said. Koch holds about 6.5 percent of Betfair’s shares, according to data compiled by Bloomberg.
Sky News reported yesterday that CVC is considering a 750 million pounds ($1.15 billion) offer for the gambling operator. Today’s share price jump puts the market value at 800 million pounds.
“Betfair is highly cash generative and is sitting on a large cash pile, we assume this is at the core of its potential attraction to CVC,” Ivor Jones, an analyst with Numis who rates the stock buy, said in a note today. “It is difficult to see how Betfair could be worth as much to a leveraged buyer as it could be to a bookmaker with synergies to extract. We would not consider it inevitable that it is taken over.”
Betfair today “strongly advised” shareholders to take no action. “I believe Betfair is currently going through one of the most exciting phases in its development,” Chairman Gerald Corbett said today in a statement.
Betfair said last month that third-quarter revenue in the U.K. rose 6 percent and said it was confident that its underlying full-year earnings before interest, tax, depreciation and amortization will be in line with forecasts of 65 million pounds to 70 million pounds.
Of 17 analysts who share data with Bloomberg, six advise buying the stock, eight have a hold recommendation and three recommend selling.