The sale of the Horserace Totalisator Board (the Tote) to the UK bookmaker Betfred for £265 million has today been agreed. This comes less than a year after the Chancellor announced the Government’s intention to resolve the future of the Tote, and follows numerous failed attempts to do so in the past.
Today’s announcement delivers much needed certainty to the Tote and its employees so they can continue to develop the business as part of a larger group for the benefit of all stakeholders. In addition, racing will benefit from payments of more than £155 million as a result of this deal.
The sale has been achieved in line with the Government’s declared objectives of recognising the support the Tote currently provides to the racing industry whilst also securing value to the taxpayer. It is subject to appropriate consultation with employees and is expected to complete in around 4-8 weeks’ time.
Among the specific terms of the deal:
- Betfred has agreed to pay a headline value of £265 million for the business. This is comprised of an initial payment of £150 million and deferred amounts, including accrued interest, of £115 million;
- After deductions including debt and pensions, the net equity value to be paid to Government by Betfred is over £180 million;
- The taxpayer will retain over £90 million as its 50 per cent share of the net proceeds of the sale;
- Racing will receive over £90 million as their 50 per cent share of net proceeds from the sale (use of which will be subject to compliance with state aid regulations). In addition, Betfred has committed to making commercial payments to racing of £11 million to March 2012 and an expected £9 million p.a. over the following six years;
- The Tote Pension scheme will benefit from a £25 million upfront contribution to the plan; and
- Tote employees will have assurances on jobs and an end to many years of uncertainty.
As part of the sale process Betfred will receive an exclusive seven year licence to operate Pool betting operations on all UK racecourses, one condition of which is a requirement to provide pool betting on every approved racecourse in the country.
Betfred have provided a number of undertakings to Government relating to the racing industry and employees, including not to sell on the pool betting part of the business and to continue payment of the Levy to racing even if part of the Tote business subsequently moves offshore, until the Government’s current consultation on off-shoring has concluded and the position has been resolved. They have also publicly committed to the establishment of a Tote Racing Development Board with racing to help run the pool and foster wider collaboration. The Tote brand will remain on all UK racecourses.
Gambling and Racing Minister John Penrose, who has overseen the sale process for the Government said:
“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. Throughout this process we’ve bent over backwards to deliver a good deal for racing, and for the dedicated Tote staff around the country, so we are pleased that today’s agreement will see racing receive not only their 50 per cent share of net proceeds but also the separate commitment from Betfred to racing of a significant ongoing stream of commercial payments, plus a contractually guaranteed cap on the number of job losses.”
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 £265 million in the headline price only just over £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.”
Notes to Editors
- Earlier announcements on the future of the Tote were made in Written Ministerial Statements on 15 September 2010 and 31 January 2011.
- The sale process was led by the Shareholder Executive on behalf of DCMS.
- Government was advised during this sale process by Lazard & Co. Limited, Linklaters LLP, and Ernst and Young.
- Enquiries about Betfred should be addressed to Tulchan Communications on 0207 353 4200 or Mark Pearson at Betfred on 07702 851 425.
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