Tote worth £120m less than hoped
The Government will tomorrow stress its commitment to selling its Tote betting business despite suggestions it may get only about £280m against the £400m it once hoped for.
Heavy going: The Government won't get as much for the Tote as it hoped
In a written statement to the Commons just before Parliament closes for summer recess, the Department for Culture, Media and Sport will say it still wants an open market sale of the 540 betting shops and pools business.
The process will have to be reviewed at the beginning of September if tough financial markets continue.
But many senior industry figures believe political pressure may have again pushed Ministers to kick the sale into the long grass and that tomorrow's statement is a delaying tactic to allow them to dodge a 2001 manifesto commitment to sell the Tote.
Investment bank Goldman Sachs, advising the Government on the sale, is believed to have given an unexpectedly low valuationof what the Tote is likely to fetch in current economic circumstances.
Sources say the suggested price fell dramatically short of the £400m bid submitted last year by a consortium of racetrack owners backed by Lloyds Development Capital, the private equity arm of Lloyds TSB.
This was rejected by the Government because of its reliance on private equity. But when the consortium went alone, its £320m offer fell at the first hurdle.
Those familiar with the process say the Government has been warned that the valuation may be between £260m and £290m.
Though the Tote posted profits of £27.9m on sales of £2.8bn last week, its betting shops underperform rivals. The shops, which include the highly lucrative fixed-odds betting terminals, are being stalked by Gala Coral, Bet Fred, Paddy Power and a host of private equity buyers, including Blackstone, CVC and HG Capital.
Ladbrokes is thought to have an interest in the pools business, as well as in making a joint bid to carve up the betting shops.
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