Short-list drawn up for Tote sale

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The long-awaited sale of the Tote moved closer to the finishing line today as the Government announced the next stage of its £200 million auction.

John Penrose, minister for tourism and heritage, said a short-list of bidders had been drawn up after receiving 18 takeover proposals for the State-owned betting group.

The statement from the Department for Culture Media and Sport did not reveal the suitors, but added that another update is due in the spring.

Favourites are said to include bookmakers Gala Coral and Betfred, as well as a consortium led by former Ladbrokes chief executive Chris Bell and another bidding team headed by British Airways chairman Sir Martin Broughton.

The Government fired the starting gun on the sale during June's Budget in the latest attempt to offload the Tote into private hands.

The Tote, which was set up by an Act of Parliament in 1928, has now been lined up for sale for 10 years.

Ministers aim to resolve the future of the Tote by the end of June and have pledged to share 50% of the net cash proceeds from a sale with the racing industry.

But the Government said the proceeds will be spread out over the period of its spending review as it seeks to slash Britain's national debt.

Investment bank Lazard is handling the auction and it is understood that shortlisted bidders will now receive a financial report being compiled by accountant Ernst & Young.

They are likely to include the Tote's own board on behalf of the racing industry, which wants to return the business to its former charitable status and create the Tote Foundation.

Wigan-based Tote has endured a lengthy sale saga.

The most recent attempt to privatise the group was abandoned in 2008 due to turbulent market conditions as the financial crisis struck.

The current £200 million reported value would mark a hefty reduction on the £400 million offer submitted in 2007 by a consortium of racetrack owners, which was turned down by the Government because it was backed by private equity.

The consortium re-formed soon after, but its second approach - reportedly £320 million - was rejected at the time for being too low.

Another previous sale attempt was blocked in 2006 by the European Commission, which said the price was too low and tantamount to state aid.

The Tote is the fourth largest bookmaker in the UK, with more than 500 shops across the UK.

Its latest set of financial accounts reveal that cost-cutting helped increase earnings by 13% to £25.2 million in the year to March 31.

But its gross win - turnover less amounts payable to winning customers - dropped by 5.5% and gross profits were 4.5% down at £148.8 million.

The Tote operates through a pool betting system, with punters contributing to a central prize fund.

Its original purpose was to offer on-course pool betting as an alternative to starting price betting with bookmakers and to distribute its profits for "purposes conducive to the improvement of breeds of horses or the sport of horseracing".

The Tote handed £11.3 million in contributions to the horseracing industry in the last financial year.