State-owned betting agency Tote is to be put up for sale on the open market after the government declined a takeover bid by a racing consortium.
The racing consortium was made up of management and employees of Tote, in a bid worth £320 million.
The government had planned to organise a closed sale of the betting agency but ministers were informed that the £320 million bid would undercut the value of the business and be in breach of European competition laws.
PricewaterhouseCoopers has valued Tote at £400 million. Gambling firm, Gala Coral, are among the interested parties that want to buy Tote and have said they are willing to bid £405 million. The auction process of the sell-off of Tote is likely to begin in January and last around nine months. However, the process could last beyond 2008 as ministers are deciding whether to wait for the market to recover before selling off Tote.
The bookmaking industry is thought to be disappointed that the racing consortium’s bid has failed. It was thought that the bid would have resolved the issue of the annual levy it has to pay the racing industry as bookmakers and the racing industry have failed to agree a figure for next year.
Britain’s biggest bookmakers; Ladbrokes and William Hill, are unlikely to buy Tote as they would face insurmountable competition hurdles. Whereas the UK’s fourth largest bookmaker, Betfred, might find Tote too expensive to buy.
Ladbrokes, William Hill and Betfred are thought to be willing to sell half of their controlling stake in Satellite Information Services (SIS) to Britain’s 59 racecourses in a move to defuse a legal row with new horseracing television service Turf TV.
A source close to SIS said, “We could sell 20% of our collective stake in SIS to racing if it helped get a sensible deal. It would be a proper sale though. We are not going to give it away.”
Finally, Alphameric, the part-owner of Turf TV saw its share price fall 17 percent to 20p on Monday morning following the news that takeover talks have been terminated. The company said that discussions regarding a possible bid had “not progressed to an offer which is in the best interests of shareholders.”
