Coral is sold to venture capitalist Charterhouse for pounds 860 million; Ashdown will fulfil lifetime ambition by taking over the reins.
SENIOR management and staff at Coral Eurobet emerged the big winners yesterday when an agreement to sell the UK's third-biggest betting- shop operator to venture capitalists Charterhouse Development Capital for pounds 860 million was signed in the early hours of the morning.
The deal, which has to be ratified under EU competition law, is expected to be completed within a month, where upon chief executive Bob Scott will hand over the reins to current managing director Vaughn Ashdown.
Scott, who was drafted in when Morgan Grenfell Private Equity (MGPE) bought Coral from Ladbrokes for pounds 390m in December 1998, will walk away with a handsome pay-off - reputedly at least matching John Brown's pounds 9m from the William Hill flotation - and Ashdown will achieve his lifetime ambition to run the company.
Scott said: "Coral will still be independent, which is a great result for a great company.
"Everybody's happy. I'm leaving through choice, with the job of successfully seeing the company through another phase of its development, and it's fantastic for Vaughn and Mick Mariscotti, the finance director, who can get on and grow the business.
"Morgan Grenfell has had a good result, and Coral staff can take heart from how things have turned out."
Ashdown, who interrupted a family holiday in Portugal to complete the deal, added: "There was a fear that if the sale had gone to a trade buyer the business would have been split up, but that won't happen.
"It's a dream come true for me. I'm Coral through and through, after joining the company 20 years ago, and I couldn't be more pleased."
After a number of false starts, which included scrapping the idea of a stock-market flotation, MGPE lowered the flag on a bidding process in the spring.
It is understood there were eight strong bidders, from the UK and overseas, but though a number of leading names were mentioned as possible front- runners, the field was reduced to two a week ago.
Unbeknown to usually well-informed financial sources, Charterhouse had managed to gallop through to challenge the foremost trade contender, Rank, which has been looking to expand its bingo and gaming business portfolio for some time.
Rank's chief executive, Mike Smith, boasts a CV that contains the names of all the Big Three bookmakers, including a brief but tumultuous spell at Coral, but he was pipped at the post by the outsider.
However, Ashdown revealed that Charterhouse had rapidly grown into the management's preferred option. He said: "As the auction process went on, we got closer and closer, and the chemistry between the principals was perfect."
Scott added: "Charterhouse had made it known they were interested in the business for a long time. It came down to a simple auction process, but they were definitely the management's choice."
The Coral purchase is Charterhouse's first investment from a new fund totalling three billion euros [pounds 1.9bn].
Chief executive Gordon Bonnyman said: "We have a long-standing reputation for buying industry-leading businesses in partnership with managements that can unlock long-term growth, and we very much look forward to working with Vaughn Ashdown and his team."
Ashdown joined Coral just as the company was being taken over by Bass, whose unconditional sale of the group to Ladbrokes for pounds 363m in December 1997 heralded a period of remarkable highs and lows.
The Ladbrokes deal, which also involved the Tote, was subsequently blocked by DTI minister Peter Mandelson on competition grounds. Though handing over a very profitable estate hurt badly, Ladbrokes got their money back with interest when MGPE entered the fray at pounds 390m in December 1998.
Buying the Eurobet internet operation initially knocked a substantial hole in Coral's balance sheet but, aided by changes to the betting-tax regime and the boom in non-horseracing activity, the company - which operates 870 high-street outlets as well as Romford and Hove greyhound tracks - has clawed its way back to profitability.
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|Publication:||The Racing Post (London, England)|
|Date:||Aug 3, 2002|
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