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CVC Considers Takeover Bid of Betfair

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CVC, the private equity firm and former owner of Australian TV network, Nine Network, has confirmed that it is involved in talks to take over the London listed betting exchange, Betfair.

Shares for Betfair climbed 12% earlier this week after CVC Capital Partners issued a statement confirming that it had held "preliminary discussions with Richard Koch, Antony Ball and partners regarding options in respect of Betfair, which could include an offer for Betfair by funds advised by CVC together with Richard Koch, Antony Ball and partners."

Betfair is a global betting exchange with operates differently to traditional sports betting platforms, allowing punters to wager against each other instead of against Betfair. The betting exchange takes a cut of each transaction.

Betfair Australia Operations Profitable

Betfair also operates betting platforms in Australia which are owned in a joint venture with casino tycoon, James Packer through his Crown Ltd. Group.

Last year, Crown said that its Betfair Australia interests yielded the group $3.1 million.

Betfair's operations in Australia have profited other Oz gambling groups as well. Online bookies such as Centrebet and Tom Waterhouse have been reaping the rewards ever since Betfair went to the Australian Federal Court in 2008 and demanded that an interstate advertising ban be lifted in the country.

After Betfair won its case, huge advertising and sponsorship deals resulted on major sports leagues such as the AFL.

CVC Loses Nine Entertainment

Last year CVC Capital Partners made headlines after lenders for the group's Nine Entertainment TV networks were forced to swap more than $3 billion in debt for equity, essentially giving US hedge funds control of one of Australia's largest media firms.

The deal wiped out CVC's $1.8 billion investment in Nine Entertainment, making it the largest loss on a single private equity deal seen in Australasian history and one of the biggest ever seen on an international scale.

At the time, the Chairman of Nine Network called it an "outstanding outcome" for all stakeholders.

"The business has great momentum and strong cash flow," he said, "and now it will have the strongest balance sheet in the industry."

CVC, which also owns F1 racing, paid $5.3 billion for Nine Entertainment over two deals at the height of the 2006 - 2008 buyout boom. It paid $1.8 billion out of its own funds and the rest by receiving cheap financing.

More news about the CVC Betfair takeover bid is expected to be released in the coming days.

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