Sky sells majority stake in Sky Bet

Satellite broadcaster Sky has sold a majority stake in Sky Bet, valuing the gambling operation at £800m.

The Leeds-based operation, which includes sites such as Sky Vegas and Sky Bingo, is being bought by private equity group CVC Capital Partners.

Sky will be paid £600m when the deal is completed next year and will retain a 20% stake.

Betting and gaming was not regarded as part of Sky's core business, a spokesperson said.

The sale would allow it to focus on the "significant growth opportunities" in pay television in the five European markets it operated in, Sky said.

The company recently completed the acquisition of Sky Italia and a 90% stake in Sky Deutschland, bringing its customer base to 20 million across Britain, Ireland, Germany, Austria and Italy.

Jeremy Darroch, chief executive of Sky, said the sale realised "significant value" for shareholders.

Shares in Sky rose 1.2% to 938p in London, valuing the company at just over £16bn. The stock has risen by almost 20% in the past 12 months.

'Successful asset'

Analysts at Citi said Sky could use some of the proceeds to buy out the remaining minority shareholders in Germany, adding: "We think a sale of Sky Bet is a sensible strategic move."

Investec described Sky Bet is a "non-core but highly successful asset" and said proceeds should help the company pay down debt, which was expected to be £6.3bn for the 2015 financial year.

CVC, which has had an interest in the betting and gaming sector with stakes in companies such as William Hill and IG Group, tried to buy Betfair last year in a £1bn deal. However, the two companies failed to agree on price.

The private equity group controls the Formula One motor racing business.

Sky Bet will remain in Leeds with all staff moving to the new entity.

The business generated net revenues of £182m in the year to June 30 and pre-tax profits of £50m.

Sky has struck a long-term brand licence agreement with Sky Bet.