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Saturday, 15 December, 2018

Ladbrokes Coral agree takeover by online operator GVC worth up to £4bn

Ladbrokes Coral are set to be taken over by rival GVC Holdings
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Ladbrokes Coral have agreed to the terms of a takeover offer from online rival GVC Holdings, it was confirmed on Friday, creating one of the world's largest gambling companies.

The deal will be worth up to £4 billion, with GVC, the owners of the Sportingbet and bwin brands among others, holding around 53.5 per cent of the enlarged group, which would be propelled into the FTSE 100.

The final price will depend on the government's review of FOBT stakes and prizes. The deal is based on a sliding scale, with a valuation of around £3.2bn if stakes are cut to £2 from £100, rising to £4bn if the maximum stake is set at £50.

The two companies revealed they were in detailed talks about a deal this month but had been linked for some time, with talks believed to have fallen through on two previous occasions.

GVC chief executive Kenny Alexander said: "The creation of one of the world’s largest listed sportsbetting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect.

"In a dynamically evolving industry, the transaction creates an enlarged group with the scale, diversity, proprietary technology and management expertise to pursue many opportunities globally.

"GVC has a proven track record of creating shareholder value through the successful integration of acquired businesses and the GVC board believe this transaction will create further value for our shareholders and those of Ladbrokes Coral."

Kenny Alexander: the GVC chief executive will fill the same role at the enlarged company
GVC said the tie-up between the two companies would create cost savings of £100 million a year.

Alexander will be chief executive of the enlarged group, with GVC chairman Lee Feldman taking the same role post merger. Ladbrokes Coral's Paul Bowtell will be chief financial officer, while non-executive directors are expected to be drawn from the current GVC board.

Ladbrokes Coral chairman John Kelly said the management team at the company had "created a leading betting and gaming business built on strong brands well positioned in key markets".

He added: "Notwithstanding that, the Ladbrokes Coral board believes that the proposed combination with GVC accelerates our strategy to improve the customer experience, drive faster online growth and build a more diverse and extensive international portfolio of businesses.

"The acquisition has compelling strategic rationale allied to an opportunity to use the best of both from proven management teams and will create material shareholder value. It secures earlier delivery of our long-term value potential, which is why the board of Ladbrokes Coral has unanimously recommended GVC's offer."

The acquisition is expected to be completed by the end of the first quarter of 2018 or early in the second quarter.

Ladbrokes Coral's share price ended Friday up 2.5p at 176.5p, while GVC's was down 21.5p at 912.5p.

Comment Deal marks changing of the guard

GVC Holdings complete their takeover of Ladbrokes at some point in the spring next year it will mark a changing of the guard for the wider gambling industry.

That the two boards have agreed terms is no great surprise, given they revealed they were in detailed talks this month and it had been widely reported they had come close to a deal twice before.

It is, though, symbolic of the rapidly changing face of the betting sector. The Ladbrokes and Coral brands have been operating for 200 years between them, built latterly on the back of their betting shop estates.

GVC was formed only 13 years ago and until now has been a solely online operation, built on a series of acquisitions by their highly regarded chief executive Kenny Alexander.

The industry consolidation is unlikely to stop here, with all eyes turning to Ladbrokes Coral's old rivals William Hill, who have yet to secure their own transformative deal and have been linked to Canadian gaming company The Stars Group.

Bill Barber

If you are interested in this you should also read:

GVC hails 'fantastic opportunity' from £3.9bn Ladbrokes Coral takeover

Ladbrokes Coral shares soar after GVC paves way for deal

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The creation of one of the world’s largest listed sportsbetting companies is a truly exciting prospect
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