Branson wants to buy into national lottery
Each 20 percent holding of profitable lottery operator Camelot could fetch R1.1 billion
BRUISED by his two unsuccessful bids in the past to run the National Lottery, Sir Richard Branson will attempt to take control of the current lottery operator, Camelot, as the deadline passes for the sale of up to 80 percent of the company.
Bidders have been given two weeks to table their opening offers. Experts believe the auction, which is being overseen by the finance houses Greenhill and NM Rothschild, could result in Sir Richard taking over Camelot.
The move comes as four of Camelot’s five shareholders – Thales Group, Fujitsu, Cadbury and De La Rue – put their 20 percent stakes in the lottery licence holder up for sale.
The fifth shareholder, Royal Mail, is not currently part of the sale process, but insiders believe it could decide to sell its stake to the winning bidder.
Some estimate that each 20 percent holding could fetch up to £90 million (R1.1 billion).
Sir Richard, head of the Virgin Group, has crossed paths with Camelot twice in the past. Camelot beat his People’s Lottery bid for the initial contract ahead of the lottery’s launch in 1994, and in 2000 he failed to acquire the renewed seven-year licence.
It is understood that prospective bidders for Camelot are a combination of trade buyers and private equity firms.
Camelot makes an annual profit of around £30m and saw sales top £5.1m in the year to March – its best figures for a decade. However, valuing the stakes is particularly complicated as there are relatively few international lottery operators. Nonetheless Sir Richard, w h o i s b e l i e ve d t o h ave approached leading charities to discuss an alliance ahead of the bid, is clearly aware of the company’s potential value to his business empire, which includes financial services group Virgin Money and a majority stake in the airline Virgin Atlantic.
After winning the first licence granted in 1994 by the government, Camelot retained it through the next two rounds. Its latest 10-year licence began in February.
Shareholder Cadbury, currently the subject of an aggressive £10.2bn takeover bid by the US company Kraft, is thought to be particularly keen to sell its stake in Camelot, as is the French defence and electronics company Thales Electronics.
More than 20 prospective bidders for the majority stake in the lottery operator were told they must submit offers by November 18. Over a quarter of total lottery revenue is allocated to worthy causes, half is paid out in prizes, while 12 percent goes to the government in lottery duty. – The Independent