MGPE wins on Coral Eurobet

Morgan Grenfell Private Equity (MGPE) has sold Coral Eurobet to Charterhouse Development Capital in a GBP860 million secondary buyout, making a return of three times the money invested. MGPE acquired the betting business for GBP390 million in a hotly contested auction in 1999. There was a similar amount of interest in the company this time around. MGPE announced its intention to sell early this year and Charterhouse beat potential trade buyers, Rank, Stanley Leisure and Gala, and private equity rivals including Candover and US firm Gilbert Global Equity Partners.

MGPE acquired the business from Ladbrokes after a Monopolies & Mergers Commission ruling prohibited the merger of the two betting companies. After aborted IPO attempts in previous years MGPE had been considering a listing for Coral Eurobet in 2002 but was pipped to the post by William Hill, the betting chain that was listed earlier this summer by investors Cinven and CVC Capital Partners. In February 2001 MGPE put an additional GBP15 million of loan stock into Coral Eurobet and it was reported that the investor was looking for a buyer.

The investment, supported by debt from Lehman Brothers, which also financed the MGPE deal, will be the first from Charterhouse’s seventh fund. Charterhouse is hoping to raise EURO3 billion for the new fund, which is the first it has raised since gaining its independence in 2001. Charterhouse was also part of the consortium that acquired France Telecom’s TDF business in July for EURO1.9 billion.

Coral Eurobet is a leading international bookmaker, offering fixed odds betting on a range of sporting events. In addition to the 870 betting shops it manages in the UK, the company also operates a telephone betting service in Europe, a WAP and online betting service (Eurobet), and two modern greyhound stadia in Romford and Hove. Bob Scott, current CEO of Coral Eurobet, will step down following the deal. Vaughn Ashdown, who is presently managing director of the company, will replace him.

The sale is expected to complete in September, subject to EC competition clearance and the completion of tender offers for Coral Eurobet’s high yield notes and payment-in-kind securities. Lehman Brothers is advising Coral Eurobet and MGPE, and is also dealer manager for the tender offers.

Pinsent Curtis Biddle advised the company’s management, Allen & Overy advised MGPE and Latham & Watkins and PricewaterhouseCoopers advised Charterhouse Development Capital.