12 April 2007 – Financial Times
The Reuben brothers, the property billionaires, are thought to be behind a lower than expected bid for Northern Racing, which led shares in the racecourse group to dive.
The board’s announcement yesterday that it was in exclusive talks with a mystery potential bidder over a possible cash offer of no more than 200p a share sent the stock 39p lower to 203.5p.
The potential offer, which would create an enterprise value of £95m, follows a 184p a share approach in December.
The 200p a share level represents a 17 per cent discount to Northern Racing’s previous close at 240p, indicating the market had expected a much higher bid to materialise.
Tony Kelly, Northern Racing’s finance director, said: “The price as it was, was perhaps fuelled by speculation, which did not emanate from the company”.
The company, which own nine racecourses including Chepstow and Uttoxester, declined to comment on the identity of the potential bidder but speculation centred on the Reuben Brothers.
David and Simon Reuben, together worth about £4 bn, are thought to want to merge Northern Racing with Arena Leisure, another racecourse group.
Arena owns seven racecourses, including Doncaster, home of the St Leger flat race. Shares in Arena slipped 2p to 75.5p on news of the potential bid for Northern Racing.
The Reuben brothers are understood to own a 3.2 per cent stake in Northern Racing through a vehicle called Warley Associates, in addition to controlling 14 per cent of Arena through contracts for difference.
Greg Feehley, analyst at Altium Securities, said that 200p was a “very good price” for Northern Racing, representing a multiple of 26 times 2007 estimated earnings.
A merger of the two racecourse groups would not offer much in the way of synergies, he said, but there would be great potential to sell some property, possibly for residential development. “The icing on the cake is unlocking under-utilised land for alternative use,” Mr Feehely said.