BETFAIR GROUP LTD 
By ?
Not for release, publication or distribution, in whole or in part, in or into any jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction
Betfair Group plc
13 May 2013
Offer Discussions Terminated
Betfair Group plc ("Betfair" or the "Company") announces that discussions with CVC Capital Partners, Richard Koch, Antony Ball and partners (together, the "Co-offerors") have been terminated
On 22 April 2013, the Board of Betfair (the "Board") announced that it had rejected a preliminary proposal (the "Proposal") from the Co-offerors regarding a possible offer for the Company at an offer price of 880 pence per Betfair share. The Company also announced that following the completion of its financial year ended 30 April 2013, the Company would bring forward its trading and strategy update by 7 weeks to 7 May 2013.
On 7 May 2013, Betfair announced a trading and strategy update following the completion of its financial year ended 30 April 2013. The announcement provided the Company's shareholders and potential investors with a detailed update on recent trading performance and the progress in the implementation of the Company's strategy which was set out in December 2012. In particular, the update set out:
n The estimated results for the financial year ending 30 April 2013 which were above the top end of the Company's previous guidance range with estimated revenue of c.£387 million and estimated underlying EBITDA of c.£73 million;
n The excellent progress made in the delivery of the Company's plan, including an increase in the cost savings estimate to c.£30m (from £20m) and that the full benefit of the cost savings would be realised in the financial year ending 30 April 2014; and
n The strong strategic momentum within the Company, including indications that product and marketing strategies are working, evidence that the exchange and sportsbook are complementary, and that opportunities exist to accelerate growth through building a presence in international markets and utilising the Company's balance sheet strength to achieve greater scale.
Following the announcement of the trading and strategy update, the Board received a revised proposal from the Co-offerors (the "Revised Proposal") on the evening of Friday, 10 May 2013. The Revised Proposal valued each Betfair share at 920 pence per share in cash (an increase of 5% over 880 pence) or an unlisted securities alternative of shares and loan notes subject to an overall limit of £250 million or approximately 26% of Betfair's issued share capital. The Revised Proposal remained conditional on, inter alia, completion of due diligence, arrangement of appropriate financing and receipt of a recommendation from the Board. The Board reviewed the Revised Proposal with its advisers and rejected it. This was communicated to the Co-offerors by the Chairman of Betfair (the "Chairman") on the morning of Saturday, 11 May 2013 and the Chairman sought to understand whether the Co-offerors would be making a further revised proposal.
On the evening of Sunday, 12 May 2013, the Board received a further revised proposal from the Co-offerors, which was described as a "full and final offer" (the "Further Revised Proposal"). The Further Revised Proposal valued each Betfair share at 950 pence per share in cash (an increase of 8% over 880 pence) or an unlisted securities alternative of shares and loan notes valued at 920 pence per share subject to an overall limit of £250 million or approximately 26% of Betfair's issued share capital. The Further Revised Proposal remained conditional on, inter alia, completion of due diligence, arrangement of appropriate financing and receipt of a recommendation from the Board.
The Board reviewed the Further Revised Proposal with its advisers and rejected it on the basis that it undervalues the Company and its attractive prospects. The Chairman communicated this decision to the Co-offerors on Sunday evening but indicated that, if the Co-Offerors were willing to further improve their proposal, the Board would consider further discussions. The Co-offerors indicated a willingness to reconsider their proposal in conjunction with discussions regarding their business plan for Betfair.
During these discussions it became clear that it would not be possible to agree the terms of any proposal in conjunction with a business plan that was deliverable. In light of this, the parties terminated discussions and the Co-offerors confirmed that they would be issuing a statement under Rule 2.8 of the Takeover Code that they do not intend to make an offer for Betfair.
Gerald Corbett, Chairman of Betfair, said:
"The Board has spent considerable time assessing the various proposals, including detailed discussions with the Co-offerors. The Board concluded that none of the proposals represented adequate value or acceptable execution risk.
Under the new direction of Breon Corcoran and his management team the Board believes that Betfair is making excellent progress in the implementation of its strategy with momentum building from early success. The Board remains confident in the continued delivery of this strategy and the Company's outlook and growth prospects."
Note 3 of Rule 2.5 of the City Code on Takeovers and Mergers (the "Code") requires the Company to point out that this statement is being made by the Company without prior agreement or approval of the Co-offerors.
For further enquiries, contact:
Betfair Group plc
Paul Rushton, Investor Relations Tel: +44 (0) 20 8834 6139
Goldman Sachs International Tel: +44 (0) 20 7774 1000
Anthony Gutman
Nick Harper
Phil Shelley (Corporate Broking)
Morgan Stanley Tel: +44 (0) 20 7425 8000
Henry Stewart
Laurence Hopkins
Peter Moorhouse (Corporate Broking)
Barclays Tel: +44 (0) 20 7623 2323
Jim Renwick (Corporate Broking)
Jon Bathard-Smith (Corporate Broking)
Powerscourt Tel: +44 (0) 20 7250 1446
Rory Godson
Important Information
This announcement is not intended to and does not constitute, or form part of, an offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any securities, or the solicitation of any vote or approval in any jurisdiction.
Goldman Sachs International, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to Betfair and for no one else in relation to the matters described in this announcement and will not be responsible to anyone other than Betfair for providing the protections afforded to clients of Goldman Sachs International nor for providing advice in connection with the matters described in this announcement or any matter referred to herein.
Morgan Stanley & Co. International plc, which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to Betfair and for no one else in relation to the matters described in this announcement. In connection with such matters, Morgan Stanley & Co. International plc, its affiliates and their respective directors, officers, employees and agents will not regard any other person as their client, nor will they be responsible to anyone other than Betfair for providing the protections afforded to their clients or for providing advice in connection with the matters described in this announcement or any matter referred to herein.
Barclays Bank PLC, acting through its investment bank ("Barclays"), which is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority in the United Kingdom, is acting as financial adviser to Betfair and for no one else in connection with the matters described herein and will not be responsible to anyone other than Betfair for providing the protections afforded to its clients or for providing advice in relation to the matters described in this announcement or any transaction or arrangement referred to herein.
Profit Estimate
The statements above that the estimated Group revenue for FY13 was approximately £387 million and that estimated Group underlying EBITDA1for FY13 was approximately £73 million (the "Betfair Profit Estimate") constitute a profit forecast for the purposes of Rule 28 of the Code. As such it is a requirement under the Code that the Betfair Profit Estimate is reported on by Betfair's reporting accountants and financial advisers. The bases and assumptions behind the Betfair Profit Estimate and the reports of KPMG Audit plc and Goldman Sachs International and Morgan Stanley & Co. International plc were set out in the appendix to the Trading and Strategy Update announcement released on 7 May 2013, which is available at: http://corporate.betfair.com/investorrelations/results-and-presentations/results-centre.aspx. The Betfair Profit Estimate remains valid for the purpose of the offer and KPMG Audit plc and Goldman Sachs International and Morgan Stanley & Co. International plc have consented to their reports continuing to apply. Other than the Betfair Profit Estimate, no statement in this announcement is intended as a profit forecast and no statement in this announcement should be interpreted to mean that earnings per Betfair share for the current or future financial years would necessarily match or exceed the historical published earnings per Betfair share.
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Forward Looking Statements
This announcement (including information incorporated by reference in this announcement), oral statements made regarding the subject matter of this announcement, and other information published by Betfair contain statements which are, or may be deemed to be, "forward-looking statements". Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Betfair about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "is subject to", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Betfair can give no assurance that such expectations will prove to be correct. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. Other unknown or unpredictable factors could cause actual results to differ materially from those in the forward-looking statements. Such forward-looking statements should therefore be construed in the light of such factors. Neither Betfair, nor any of its respective associates or directors, officers or advisers, provides any representation, assurance or guarantee that the occurrence of the events expressed or implied in any forward-looking statements in this announcement will actually occur. You are cautioned not to place undue reliance on these forward-looking statements. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules), Betfair is not under any obligation, and Betfair expressly disclaims any intention or obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Certain data in this announcement, including financial, statistical and operating information, has been rounded. As a result of such rounding, the totals of data presented in this announcement may vary slightly from the actual arithmetic totals of such data.
Dealing Disclosure Requirements
Under the provisions of Rule 8.3 of the Code, if any person is, or becomes, "interested" (directly or indirectly) in 1% or more of any class of "relevant securities" of the Company, all "dealings" in any "relevant securities" of that company (including by means of an option in respect of, or a derivative referenced to, any such "relevant securities") must be publicly disclosed by no later than 3.30 pm (London time) on the London business day following the date of the relevant transaction. This requirement will continue until the date on which the offer becomes, or is declared, unconditional as to acceptances, lapses or is otherwise withdrawn or on which the "offer period" otherwise ends. If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an "interest" in "relevant securities" of the Company, they will be deemed to be a single person for the purpose of Rule 8.3.
Under the provisions of Rule 8.1 of the Code, all "dealings" in "relevant securities" of the Company by the offeror, or by any of their respective "associates", must be disclosed by no later than 12.00 noon (London time) on the London business day following the date of the relevant transaction.
A disclosure table, giving details of the companies in whose "relevant securities" "dealings" should be disclosed, and the number of such securities in issue, can be found on the Takeover Panel's website at www.thetakeoverpanel.org.uk.
"Interests in securities" arise, in summary, when a person has long economic exposure, whether conditional or absolute, to changes in the price of securities. In particular, a person will be treated as having an "interest" by virtue of the ownership or control of securities, or by virtue of any option in respect of, or derivative referenced to, securities.
Terms in quotation marks are defined in the Code, which can also be found on the Panel's website. If you are in any doubt as to whether or not you are required to disclose a "dealing" under Rule 8, you should consult the Panel.
Publication on website
A copy of this announcement will be made available on Betfair's corporate website,http://corporate.betfair.com. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.
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