Tote pulls out of the race for Coral

CINVEN AND Morgan Grenfell, the venture capitalists, last night were left neck-to-neck in the race for Coral after the Tote withdrew from the bidding war for the betting shops chain being sold by Ladbroke.

In a brief statement, the state-owned bookmaker said that Ladbroke had rejected its pounds 375m offer for the 833 outlets.

The bid is understood to have been far short of Cinven and Morgan Grenfell's offers, which are believed to be just under pounds 400m.

However, the Tote, which was backed by venture capitalists Electra Fleming and Candover, said that it did not want to pay over the odds for Coral, the UK's second largest bookmaker.

A spokesman for the state-owned group, which is Britain's fifth largest bookmaker, said: "We have looked at Coral upside down and inside out but we really think that [pounds 375m] was the most we could offer".

The bookmaker was understood to have already increased its bid from around pounds 345m in an attempt to match the offers tabled by the two venture capitalists.

The Tote's withdrawal, the last trade buyer in the running, is set to trigger a final auction by the two venture capitalists groups. Sources close to Ladbroke, which was forced to sell Coral by the competition authorities, yesterday said the bidders were locked in the last round of negotiations.

The venture capitalists' bids are believed to be fronted by racing figures. Cinven is thought to have the support of some of Coral's existing management, while Morgan Grenfell's has been rumoured to have enlisted Bob Green, a well-known bookmaker who used to head William Hill.

Industry experts believe that Cinven and Morgan Grenfell could raise their bids further, putting a final price tag of around pounds 400m on Coral. This would be well in excess of the pounds 363m Ladbroke paid the brewing giant Bass in May for the Coral chain. The deal was blocked by the Trade Secretary Peter Mandelson four months later on competition grounds. Mr Mandelson ruled that the Coral acquisition would have given Ladbroke, the UK's largest bookmaker, a dominant position in the pounds 1bn a year betting market.

The minister ordered the hotel and gaming group to dispose of the shops within six months and urged to sell them to a single buyer to create a powerful "third force" behind Ladbroke and William Hill.