Ladbrokes Coral and GVC are back in "detailed" takeover talks

Ladbrokes

Ladbrokes and Gala Coral completed a merger last year

Global gaming group GVC Holdings has offered to buy UK-based Ladbrokes Coral, offering $5.2bn for the bookmaking group.

Ladbrokes Coral, which operates 3,500 shops across England, Wales and Scotland, became the UK's biggest High Street bookmaker following last year's merger of Ladbrokes and Coral.

A combination of GVC, which owns online gambling platforms including Partypoker and Sportingbet, and betting-shop operator Ladbrokes Coral could spark even more consolidation in the sector. It started a 12-week consultation to consider cutting the stake to between 50 pounds and 2 pounds, from 100 pounds now.

As mentioned above, the gambling companies in the United Kingdom have been preparing for further consolidation in the local betting industry for months now, with the dealmaking process being interrupted by the further regulatory measures imposed by United Kingdom authorities.

It would also get a potential further value of up to 42.8p, depending on the outcome of the United Kingdom government's Triennial Review into fixed-odds betting terminals (FOTBS) and its impact on profits.

Shares in Ladbrokes soared 28% to 174.2p in early trading on Thursday, while GVC climbed 8% to 979p. It is expected that the proposed offer would include a mix and match facility whereby Ladbrokes Coral shareholders may elect to receive more cash or more shares in GVC, subject to offsetting elections being made by other Ladbrokes Coral investors.

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Speculation about a combination of GVC and Ladbrokes emerged previous year.

The review is part of a government crackdown on FOTBs after MPs raised concerns the machines were too addictive and fuelled problem gambling.

In November, GVC sold its Turkish business for up to €150mln to Ropso Maltato to pave the way for potential merger with Ladbrokes Coral.

Alexander said that talks with Ladbrokes Coral restarted in recent weeks after a deal structure was devised that could account for the different potential FOBT consultation outcomes. "You can only sit and wait for so long". A larger company could have a greater competitive advantage versus sector peers. The latter would fall as online grows, he added.

GVC said it expects the deal would results in "material synergies which will create value for both sets of shareholders" and that it will increase earnings per share by a double-digit rate from the first full year post-completion.

Houlihan Lokey and Investec are advising GVC on the deal, while Ladbrokes Coral is working with Greenhill and UBS.

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