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Betfair shed 500 jobs

08 May 2013

AROUND 500 jobs have been lost under a radical restructuring at Betfair, which announced results for their recently ended financial year would be ahead of expectations as management presented the case for their defence against a £910 million takeover bid from private equity group CVC Capital Partners.

Chief executive Breon Corcoran gave the City an update on his strategy for the exchange with what had been flagged as a twoyear £20m cost-cutting exercise becoming £30m in savings delivered by the end of this financial year. Central to that strategy was the news the number of employees at the company had been reduced by around 500 following restructuring, producing approximately £23m in savings. The cuts represent more than 20 per cent of the workforce, with 1,832 still employed at the end of April.

Revenue for the year ended April 30 was estimated at £387m while Ebitda (earnings before interest, tax, depreciation and amortisation) was forecast to be around £73m, with the performance driven by stronger than expected sportsbook revenues in the UK and revenue remaining resilient where Betfair have ceased marketing. Corcoran told analysts: “We’ve had a stronger than expected finish to the financial year and that’s a very good start. Some excellent progress has been made on delivery against December’s plan. Specifically we’ve taken out more cost than planned and done this more quickly than expected.

“ The regulatory mix is improving and we’re getting paid for the investments being made in product and marketing. “Having diagnosed many of the
structural weaknesses in Betfair, having fixed many of these identified issues, we are on a daily basis driving performance. From this base we can now broaden our thinking and are increasingly focused on accelerating growth within the business and externally.”
However, the £140m one-off payout to shareholders that had been mooted as a way of fending off CVC’s bid was not forthcoming, nor indeed was any mention of CVC’s offer. Corcoran added: “We support the principle of returning excess capital to shareholders but we believe it is premature to do
so at this stage as we see real opportunities to accelerate the strategy through acquisitions.”

Chairman Gerald Corbett had rejected the initial offer from CVC, saying it had fundamentally undervalued the company. Some observers certainly
regarded Betfair’s statement as a compelling case. An analyst’s note from Dublin-based Davy Stockbrokers said: “ This statement should prompt larger private shareholders to compare and contrast the future prospects for the business as a public or privately owned entity. From reading the progress-to-date report, it is not clear to us how the business would be any better positioned in private hands.”
CVC has been given a deadline of May 13 to table a formal bid for Betfair and has been expected to improve on its initial 880p a share offer.

At close of trading yesterday Betfair shares were up 0.71 per cent at 851.00p.

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