Ladbrokes Coral in talks over takeover by GVC

Ladbrokes Coral in talks over takeover by GVC

Shares in both GVC Holdings (LSE: GVC) and Ladbrokes Coral (LSE: LCL) have jumped in early deals after it was announced this morning that GVC had approached its peer proposing yet another deal. The discussions were given a start a non-binding proposal was sent from GVC Holdings to Ladbrokes Coral regarding a possible offer for the entire capital of Ladbrokes, which could end up with a combination of the businesses.

Speculation about a combination of GVC and Ladbrokes emerged a year ago. Ladbrokes Coral, whose traditional betting shops in the U.K.'s town centers are fading, would get more exposure to the expanding digital gaming business, while GVC could reach more potential customers for its online platforms.

In a joint statement, the companies said GVC has offered to buy Ladbrokes Coral for about £3.9bn.

Both firms have also agreed that Kenneth Alexander of GVC will be the chief executive of the combined company if the deal goes through. The company has approximately 3,500 high street betting shops.

The talks follow two previous attempts at a deal between the pair.

"GVC's recent move to exit Turkey cleared the last barrier and LCL shareholders should be pleased to see the firm is now better insulated against the vagaries of the United Kingdom market", said Neil Wilson, senior market analyst at ETX Capital.


The possible merger between two of the largest players in the British and global gambling markets could come as a effect of the consolidation process which has already started in the industry.

Addleshaws previously acted for GVC in its £1.1bn contested takeover of gambling company Bwin, which was completed in 2016, as well as its £485m takeover of Sportingbet in 2013.It also advised GVC on its transfer to a premium listing a year ago.

The final price GVC pays will depend on the outcome of this review into fixed-odds betting terminals (FOBTs), which are big moneyspinners for companies like Ladbrokes but have come under fire for leaving gamblers with very heavy losses. If the maximum stake is cut to only £50 from £100, shareholders are set to receive the maximum distribution.

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. No final decision on the maximum stakes' has been made, with the Government being expected to make an announcement in January 2018.

Olivia Cole has worked as a journalist for several years now.

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