After saying “thanks, but no thanks” to a buyout offering from CVC Capital Partners (citing their valuations of their company as far too low), online sports betting outfit Betfair has come up with a new plan that they think will keep their investors feeling all warm and fuzzy: a possible $218 million (£140 million) payout to their shareholders. The idea is to keep shareholders from warming up to a hostile takeover bid if they start getting nervous about Betfair’s future. Presumably, the ability to make the handout, in and of itself, should be reassuring, let alone a nice check arriving in shareholders’ mailboxes.
Okay, so it’s not really their first choice, but it is a viable option if the tides of favor start to turn against them. With time running out for a better idea, it’s not a bad fallback plan if push comes to shove.
The problem stems from a stock freefall of late for Betfair. After debuting on the London Stock Market in 2010 at £13 a share ($20.19), shares have now dwindled down to just 845p ($13.13) as of market close last week, making the company ripe for a takeover bid if investors get gun-shy.
Betfair’s CEO was saying all the predictable things during a StockWire interview in recent weeks. “We have a unique business with a market position, profitability, cash flow, and prospects that this proposal [CVC Capital Partners’ takeover bid] fails to recognize,” said Betfair chairman Gerald Corbett. “Our new management team are implementing the strategy announced December 2012, and it is this that will realize value for shareholders. We will…set out the good progress we are making in the implementation of our strategy, including cost efficiencies, and our recent trading performance.”
Oh and by the way, would any of you like to chop up about $218 million in a big old payout, by any chance?