Betfred ‘wins Tote auction’

Culture Secretary Jeremy Hunt is expected to declare Betfred the provisional winner of the race to acquire the horseracing business, according to a report.

The deal is yet to be formally completed and a contract is yet to be signed, but technicalities are expected to be sorted out by the end of the day.

It is not known the exact fee Betfred is paying, but it is expected to be in the region of £200m.

Half the money will go to the racing industry and racing charities, and the majority of the rest will go to the Government.

A shortlist of bidders was drawn up after the Government received 18 takeover proposals for the state-owned betting group.

The racing industry is understood to have preferred a rival bid from Sport Investments Partners (SIP), a consortium led by former British Horseracing Authority chairman Martin Broughton.

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

The Coalition fired the starting gun on the latest attempt to offload it into private hands during June’s Budget, with the auction process beginning in November.

The Tote is the fourth-largest bookmaker in the UK, employing around 4,000 people in shops and on racecourses and 600 staff in its call centre and head office in Wigan.

Turnover fell by 5.5 per cent to £2.8bn last year, but operating profits improved 13 per cent on a year earlier to £25.2m and enabled the Tote to increase its contribution to racing by 8.8 per cent to £11.3m.

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

Today’s reported sale price of £200m is also a hefty reduction on the £400m 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 £320m - 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.