Tote bought by Betfred for £265m







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Tote bought by Betfred for £265m

03/06/2011

Simon Bowers

With 1,350 shops, Betfred be a nationwide competitor to Coral, Ladbrokes and market leader William Hill

Betfred, the betting shop chain owned by industry veteran Fred Done, has won the race to buy state-owned bookmaker the Tote after raising its offer to £265m.

Racing minister John Penrose said the deal would provide a £90m windfall for the taxpayer while a similar sum will be channelled to support parts of the racing industry.

The racing lobby have expressed concern that promised funds may be tied up in Treasury coffers for some time because of limits on how the money can be dispersed under European state aid rules.

Done has promised to limit Tote redundancies to 150 posts as he merges many Wigan head office functions with Betfred's existing base in Warrington.

His 800-shop Betfred business beat off stiff competition from an innovative bid put together by Sir Martin Broughton, the former chairman of the British Horseracing Board, who had planned to float the business on the Aim Bejunior stock market.

The final decision on Tote privatisation comes after weeks of bitter sniping between the rival bidders during which the British Horseracing Authority gave its backing to Broughton's bid vehicle Sports Investment Partners.

SIP, which would have handed racing an equity interest in the Tote rather than a cash windfall, had argued that its proposal offered a better deal for taxpayers and protected more jobs at the Tote's Wigan headquarters. .

However, the complexity and uncertainty of SIP's plans for an independent Tote appear ultimately to have proven to much for ministers. "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," said culture secretary Jeremy Hunt.

Much of the rowing centred on the future relationship between the Tote's pool betting monopoly business and the racing lobby. The BHA had wanted ongoing commercial ties to this part of the Tote business rather than a 50% share cash proceeds from the Tote sale.

Keen to win over sceptics in the racing industry Betfred has promised to make this business a growth priority. However, the commercial prize for Done is the Tote's 550 high street betting shops which are to be rebranded as Betfred shops.

Finance director Barry Nightingale said the deal made Betfred a "fourth force" in high street bookmaking. With 1,350 shops, it will be a nationwide competitor to Coral, Ladbrokes and market leader William Hill.

Broughton is understood to be disappointed by the government's decision and has not ruled out seeking a judicial review. Sources close the the SIP camp said they had been told that their bid had been unsuccessful because it had breached state aid rules rather than because it had offered less value to taxpayers or other stakeholders.

If this is the case, Broughton will be asking ministers to explain how his bid was allowed to progress so far through the auction process despite always being doomed.