8th of June 2011 Author: Johnny Karp
The selling process lasted over 6 months and included 18 bidders
The UK Government's Department for Culture, Media and Sport announced that the UK Horserace Totalisator Board (Tote) has been sold to the UK Bookmaker Betfred for GBP 265 million.
The official announcement focuses on the advantages of the sales, underlining that the Tote's employees received assurances on jobs and pensions, as a GBP 25 million will be contributed to the Tote Pension scheme upfront, while the racing industry will benefit up to GBP 155 million.
Government efforts to sell off the Tote, which was founded in 1928, go back some 10 years.
The latest selling process began six months ago with 18 bidders, and after a process of elimination Betfred and Sports Investments Partners - an consortium of investors headed by British Airways chairman Sir Martin Broughton - were left in contention, with the racing industry coming out publicly in favour of SIP.
'Most people can't understand why, in the modern world, the Government should be even a part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that,' Gambling and Racing Minister John Penrose said referring to the sales process.
Culture Secretary Jeremy Hunt added: 'It was a closely fought contest which has ended up giving the Tote business and the racing industry the certainty they have been looking for. Of the GBP 265 million in the headline price only just over GBP 90 million will end up being paid to the Treasury. So this deal has been carefully calculated to make sure that the interests of racing, Tote employees and the Tote Pension Fund were given the greatest possible weight.'
Completion of the sale depends on consultation with employees and is expected to close in the next couple of months.
Betfred has undertaken to ensure regular payment of the Levy to racing regardless of the location of business and even if part of the Tote operations moves offshore. In addition, Betfred agreed not to sell the pool betting part of the business.
The list of specific terms of the deal includes also Betfred's obligation to pay a headline value of GBP 265 million for the business, out of which GBP 150 million as an initial payment and GBP 115 million in deferred amounts, plus accrued interest.
Notably, after deductions including debt and pensions, the net equity value to be paid to the UK Government by Betfred shall exceed GBP 180 million; the taxpayer will keep over GBP 90 million as its 50% share of the net proceeds of the sale and, in parallel, racing will get over GBP 90 million as its 50% share of the proceeds, with a note that use of this amount will be harmonized with the official aid regulations.
Going forward, Betfred has committed to make commercial payments to racing of GBP 11 million until March 2012 and GBP 9 million per annum over next 6 years.
The deal ensures that Betfred will receive an exclusive seven-year license to Pool betting operations on all local racecourses, provided that the company enables pool betting on every approved racecourse in the UK.
The Tote brand will remain on all UK racecourses as Betfred has publicly undertaken to establish a Tote Racing Development Board with racing to help run the pool and foster wider collaboration.
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