Ladbrokes Coral talks over takeover by Bwin owner GVC

Andrew Cummings
December 7, 2017

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 jumped by 26 percent, while GVC shares rose 6 percent on confirmation of the potential offer, which is for 32.7 pence in cash and 0.141 GVC share per Ladbrokes share.

The proposed takeover would give it access to the Ladbrokes, Coral and Gala brands and the combined company would compete with William Hill and Paddy Power Betfair.

Both sides have agreed GVC's chief executive Kenneth Alexander would take charge of the combined group.


Wilson suggested that if the triennial review sees the government tightens the rules somewhat but stays short of imposing a £2 stake limit on betting machines, this could see the offer for LCL rise to somewhere in excess of 180p, "which looks a healthy premium given the regulatory overhang".

It comes amid a wave of consolidation in the sector, which has been under pressure pending the review, which is expected to significantly cut earnings from the lucrative betting machines - known as the "crack cocaine of gambling".

The two companies further revealed that they had discussed the total equity value that Ladbrokes Coral would be given as part of the merger agreement, with the British bookmaker's total equity value amounting to up to £3.9 billion. GVC shareholders would be entitled to the rest.

"Against this it does bring in some geographic risk in GVC notably around Germany following the exit from Turkey, whilst the cash elements, we estimate worth £600m and £800m (max for the triennial review element), are more the comfortable from the existing balance sheet and future cash generation".


The talks follow two previous attempts at a deal between the pair. "You can only sit and wait for so long".

A merger between Ladbrokes, which has a sizeable high-street presence and GVC, which is predominately online-based, is in the best interest of all parties.

Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November past year.

"The boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer", the two said in the statement. Based on results from the first half of 2017, he said that 56 percent of the enlarged company's earnings would come from digital and 38 percent from United Kingdom retail.


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