Sportech Shares Crash as Takeover Talks Break Down
Posted on: March 15, 2018, 02:00h.
Last updated on: March 15, 2018, 11:13h.
Shares in Sportech, the former owner of the UK’s Football Pools, nosedived on the London Stock Exchange on Wednesday, wiping more than 50 percent off the company’s market cap.
The crash came after the company was forced to issue a profit warning and confirm it had failed to find a buyer following recent acquisition talks.
Sportech put itself up for sale in October last year in a bid to “maximize value for its shareholders,” after receiving approaches from unnamed suitors. But those shareholders balked upon hearing the unnamed suitors had walked away from the process.
The company said its annual profits had fallen to £6.5 million ($9 million), just half the figure expected. The shortfall in expectations had been largely down to “accounting corrections,” according to the company.
Sportech sold the iconic Football Pools, known colloquially in the UK as “the pools,” to private equity firm OpCapita LLP for $83 million ($116 million) last June.
Prior to the establishment of the UK National Lottery in 1994, the soccer-based pool betting game was the biggest gambling event in the country. Conceived in 1923 by Littlewoods, the first pools coupons were first sold on the streets outside Manchester United’s Old Trafford stadium and involved participants predicting the outcomes of a combination of week’s forthcoming soccer matches.
But the advent of the lottery and online gaming diminished the popularity of the pools, which at their height had 15 million weekly players.
Sportech acquired the Littlewoods-branded Football Pools in 2000, and also operated the Littlewoods Gaming online gambling brand. But in recent years it has enjoyed considerable growth as a parimutuel betting systems provider for racetracks, particularly in the US market. It owns and operates several gaming venues in the US and Holland.
The company’s previous CEO, Ian Penrose, and CFO, Mickey Kalifa, both resigned in December. On Wednesday it announced Andrew Gaughan as its new chief executive, while the hunt for a CFO continues.
“Whilst a sale of the company might have delivered an immediate further return to shareholders, in addition to the £75 million ($104 million) returned last year, I am confident that the company has the potential to deliver significant long-term value to shareholders, especially if the US sports betting market is liberalised and also from further diversification strategies,” said Gaughan.
“We are focused on ensuring Sportech benefits fully from any changes in the US sports betting market and we anticipate announcing exciting new initiatives in due course.”
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