Bookmaker Coral Set To Gamble On £800m Float
Coral Eurobet, Britain's third-biggest bookmaker, is preparing for an £800m flotation and has appointed an investment bank to work on the listing.
The bookmaker, which has 1,260 betting shops in the UK, has hired Lehman Brothers as its adviser.
A flotation would deliver paper fortunes for the company's well-regarded management team, including chief executive Vaughn Ashdown and finance director Mick Mariscotti. Management owns 16% of the business and, at the valuations being discussed, that stake would be worth £128m.
A float would also provide an exit for Charterhouse, the private-equity firm that bought Coral for £860m (including debt) in a management buyout in September 2002. It owns the remaining 84% of the equity.
The firm has already recouped more than its original £278m equity outlay after two refinancings. It has taken a total of £560m out of the business to date, making it a highly profitable deal.
While a flotation is understood to be the management's preferred option, a trade sale has not been ruled out. However, any buyer would have to find at least £2 billion to take control of Coral - £800m for the equity and £1.2 billion to assume the group's debt.
Since the buyout, Coral has more than doubled its profits. It makes about £145m of operating profit on sales of £5.4 billion.
The company's growth has been fuelled by changes to gambling taxation, which have helped bookmakers, and the rise in popularity of so-called fixed-odds betting terminals - machines that allow punters to play electronic versions of games such as roulette.
As well as its betting shops, the group runs the Eurobet website and has moved into online poker.
The stock market seems to have a vast appetite for gambling-related stocks. Party Gaming and Empire Online, the internet poker groups, have both recently floated, while Gala, the bingo and casino operator, is working with bankers on a possible listing later this year.
A number of other, smaller, online gaming groups are also hoping to cash in on the boom by coming to market.
Coral's hopes of a successful flotation will be boosted by the strong performance of shares in its rival, William Hill. Britain's biggest bookie floated at 225p a share in June 2002. On Friday the shares closed at 577p, valuing the company at £2.3 billion.
A flotation would allow Coral to use its shares to make future acquisitions. It has bought a number of smaller independent chains over the past few years and is known to be keen to do more deals.
Unlike Ladbrokes or William Hill, Coral has plenty of headroom to make bolt-on acquisitions without running the risk of raising its market share to levels that would attract an investigation by the competition authorities.
Coral was founded in 1926 by Joe Coral. It has changed hands a number of times in recent years. Previous owners have included Morgan Grenfell Private Equity, as well as Ladbrokes, briefly, and Bass, the old leisure conglomerate.
