James Moore: Phantom bid for Betfair is a blast from the past that's not worth backing

Outlook. Plus: Cable's pub rescue will drown some sorrows; Big payout for exchange as it books Goldman

Has one of the companies in CVC Capital Partners' portfolio suddenly developed a workable time machine? It looks that way. Consider how the private equity firm and its pals are conducting their attempt to gobble up Betfair.

The gambling company yesterday told us that CVC's consortium might be willing to pay 880p a share to take the company off its current owners' hands.

But only if management first says yes. And opens up the books. After which, assuming it all goes well, the bidders will trot off into the City to see if someone out there is willing to cough up a loan of just over £900m, which will be loaded on to Betfair when the new boys take charge.

This sort of phony proposal used to be par for the course in the good old days before the financial crisis. Instead of putting down proper bids, potential acquirers would attempt to force the hands of their targets by tabling apparently attractive takeover "proposals" with long lists of conditions. The share prices of targets would nonetheless shoot up, and hedge funds would pour in hoping for a quick buck.

The targets' boards, now under pressure to do a deal from those hedge funds, would often cave in and open up their books, and their boardrooms, only for the prospective buyers to decide that things didn't look as pretty as they at first thought. They would table bids, but lower ones than in their first proposals.

By this time, so many people would be invested in the takeovers succeeding that shareholders would assume the position, and the bidders would be off to HBOS to sign loan agreements.

At least, that was the theory. Sometimes boards were made of sterner stuff, but it didn't stop some of the phantom bids hanging around for months, prompting the authorities to stiffen takeover rules that heavily favoured bidders over targets. Not by enough.

There may be some who feel that something close to 880p for Betfair at least makes it worth playing. That price puts the company's shares on a fancy multiple of more than 30 times this year's forecast earnings, more than twice what William Hill enjoys and nearly a third better than the fast-growing Paddy Power, from where Betfair hired its current chief executive Breon Corcoran.

However, it still undervalues the company, which is by far the world's biggest betting exchange. When it comes to exchanges, you're either the biggest or you're nobody. The big dog gets nearly all the punters, so is able to post the best prices and offer the tightest spreads, so gets nearly all the punters. And so on.

Debt-ridden Spain said yesterday that it would add betting exchanges to its list of regulated gambling products, presumably because it wants the tax. Others may follow.

It's true that stupidity is not a commodity that is in short supply in the City but if Betfair's shareholders are entertaining this proposal, here's something they should consider.

CVC might have used a time machine to produce a takeover tactic from the past, but said machine probably won't be able to bring any money forward. So who's going to cough up that £900m in today's market?

After all, HBOS, which used to love getting involved in this sort of thing, doesn't exist any more. And we all know why.

Cable's pub rescue will drown some sorrows

Is the Government getting closer to setting up OfPub? It looks that way.

Vince Cable yesterday said the Government would crack down on the "beer tie", which forces pub tenants to buy their beer from the company holding the lease on their premises.

It's not exactly a new policy, having been in the works for a while now, but with figures suggesting that an alarmingly high number of licensed premises are calling last orders for the last time, it's a welcome development.

Pub companies often argue that tenants who complain about their situation simply aren't very good at the business. They can usually provide examples of how savvy publicans have done very well out of the tied relationship.

But when one looks at the pub industry generally, it's hard to escape the conclusion that the worst businessmen are the ones at the top who loaded pub companies up with debt, squeezed tenants as a way of servicing it, and then watched the roof fall in at thousands of them up and down Britain when the economy went bad.

Mr Cable's plans won't save the sector. Pubs are having to adapt to changing consumer tastes and behaviour, which can be expensive, combined with a rotten economy. His Government deserves much of the blame for that economy.

But if the new pub adjudicator has teeth, it may at least provide a bit of relief for strugglers, who will drink to any help they can get right now.

Big payout for exchange as it books Goldman

A PS on the Betfair shenanigans. Look who's on the list of banking advisers. That's right, it's Goldman Sachs.

Back when Goldman was a respectable company, before its flotation and the rise of its trading arm, it was the first port of call for companies with unwanted bidders banging on their doors.

Goldman specialised in fending off such approaches, and it was very, very good at the job. There were no guarantees but directors knew that if they had "the firm" on their side, they stood a chance.

It was partly for this reason that Goldman became so powerful and was held in such high regard. So is this a case of "back to the future" for the bank?

Hardly. Betfair will be paying through the nose for Goldman's help. But its fee will be nothing more than a drop in a vast ocean where the waves are still being made by traders.

News
Patrick Stewart in the classiest ice bucket to date
peopleSir Patrick took a more understated approach to the challenge
News
The current recommendation from Britain's Chief Medical Officer, is that people refrain from drinking on at least two days a week
scienceTheory is that hangovers are caused by methanol poisoning
Arts and Entertainment
tvWe have created an infogaphic that looks back over the previous incarnations of the Doctor
Sport
Olivier Giroud celebrates after his late goal saved Arsenal a point at Goodison Park
football Giroud rescues a point for Arsenal after they trailed by two goals
PROMOTED VIDEO
News
i100
News
newsComedian Lee Hurst started trend with first tweet using the hashtag
News
i100
News
Australian rapper Iggy Azalea was left red faced but, thankfully, unhurt after taking a few too many steps backwards, sending her tumbling off the stage.
people
Life and Style
A nearly completed RoboThespian robot inside the Engineered Arts workshop is tested in Penryn, England. The Cornish company, operating from an industrial unit near Falmouth, is the world's only maker of commercially available life sized humanoid robots
techSuper-intelligent robots could decide destroying the human race is the kindest thing to do
Life and Style
techConcept would see planes coated in layer of micro-sensors and able to sense wear and tear
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
scienceExcitement from alien hunters at 'evidence' of extraterrestrial life
News
newsRyan Crighton goes in search of the capo dei capi
Life and Style
Customers can get their caffeine fix on the move
food + drink
News
i100
Extras
indybest

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Software Developer (Java /C# Programmer)- London

£30000 - £45000 per annum: Harrington Starr: A global investment management fi...

Senior Network Engineer-(CCIE, CCNP, Cisco, London)

£65000 - £75000 per annum: Harrington Starr: Senior Network Engineer-(CCIE, CC...

Senior Network Analyst - (CCIE, Cisco, CISSP)

£70000 - £80000 per annum: Harrington Starr: Senior Network Analyst - (CCIE, C...

Senior Network Engineer-(Design, Implementation, CCIE)

£60000 - £80000 per annum: Harrington Starr: Senior Network Engineer-(Design, ...

Day In a Page

All this talk of an ‘apocalyptic’ threat is simply childish

Robert Fisk: All this talk of an ‘apocalyptic’ threat is simply childish

Chuck Hagel and Martin Dempsey were pure Hollywood. They only needed Tom Cruise
Mafia Dons: is the Camorra in control of the Granite City?

Mafia Dons: is the Camorra in control of the Granite City?

So claims an EU report which points to the Italian Mob’s alleged grip on everything from public works to property
Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Emmys look set to overhaul the Oscars as Hollywood’s prize draw

Once the poor relation, the awards show now has the top stars and boasts the best drama
What happens to African migrants once they land in Italy during the summer?

What happens to migrants once they land in Italy?

Memphis Barker follows their trail through southern Europe
French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

French connection: After 1,300 years, there’s a bridge to Mont Saint-Michel

The ugly causeway is being dismantled, an elegant connection erected in its place. So everyone’s happy, right?
Frank Mugisha: Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked

Frank Mugisha: 'Coming out was a gradual process '

Uganda's most outspoken gay rights activist on changing people's attitudes, coming out, and the threat of being attacked
Radio 1 to hire 'YouTube-famous' vloggers to broadcast online

Radio 1’s new top ten

The ‘vloggers’ signed up to find twentysomething audience
David Abraham: Big ideas for the small screen

David Abraham: Big ideas for the small screen

A blistering attack on US influence on British television has lifted the savvy head of Channel 4 out of the shadows
Florence Knight's perfect picnic: Make the most of summer's last Bank Holiday weekend

Florence Knight's perfect picnic

Polpetto's head chef shares her favourite recipes from Iced Earl Grey tea to baked peaches, mascarpone & brown sugar meringues...
Horst P Horst: The fashion photography genius who inspired Madonna comes to the V&A

Horst P Horst comes to the V&A

The London's museum has delved into its archives to stage a far-reaching retrospective celebrating the photographer's six decades of creativity
Mark Hix recipes: Try our chef's summery soups for a real seasonal refresher

Mark Hix's summery soups

Soup isn’t just about comforting broths and steaming hot bowls...
Tim Sherwood column: 'It started as a three-horse race but turned into the Grand National'

Tim Sherwood column

I would have taken the Crystal Palace job if I’d been offered it soon after my interview... but the whole process dragged on so I had to pull out
Eden Hazard: Young, gifted... not yet perfect

Eden Hazard: Young, gifted... not yet perfect

Eden Hazard admits he is still below the level of Ronaldo and Messi but, after a breakthrough season, is ready to thrill Chelsea’s fans
Tim Howard: I’m an old dog. I don’t get too excited

Tim Howard: I’m an old dog. I don’t get too excited

The Everton and US goalkeeper was such a star at the World Cup that the President phoned to congratulate him... not that he knows what the fuss is all about
Match of the Day at 50: Show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition

Tom Peck on Match of the Day at 50

The show reminds us that even the most revered BBC institution may have a finite lifespan – thanks to the opposition