Ladbrokes could fulfil the long-held goal of buy-in Gala Coral as early as this week if reports in various Sunday newspapers are accurate.
Details of a possible merger broke three weeks ago when Ladbrokes confirmed it was in discussions with the board of Gala Coral regarding a possible merger of Ladbrokes and Coral retail, Eurobet retail and Gala Coral’s online business.
An article in the Sunday Times claims the merger could be sealed as early as this week, which would create a “high street and online betting giant” worth a combined £3.5 billion, instantly becoming the United Kingdom’s biggest bookmaker.
The enlarged company would push William Hill into second place in the British gambling industry in terms of number of betting shops
Ladbrokes is expected to issue new shares in order to buy Gala Coral. The latter is owned by a number of private equity investors including Cerberus Capital Management and Apollo Global Management and is saddled with debts of approximately £2.2 billion, a fact that is adding a level of complexity to the reverse takeover.
Should the deal go ahead as expected, the enlarged company would push William Hill into second place in the British gambling industry in terms of number of betting shops. William Hill currently has a portfolio of 2,300 betting shops while Ladbrokes has 2,194 and Gala Coral 1,845 meaning after the merger the new company will boast of 4,039 outlets.
This isn’t the first time that Ladbrokes has attempted to purchase Gala Coral because in 1998, it had a £363 million bid accepted by then-owners Bass, but Peter Mandelson (then Trade and Industry Secretary) prevented the deal from being sealed citing it “would damage competition and disadvantage punters.”
However, the betting landscape is now vastly different compared to 17-years ago with a large percentage of bets being placed via the internet so Mr Mandelson’s comments are no longer valid and the merger is less likely to be blocked by the Competition Commission.
If the deal is sealed this week, it will be the second major consolidation in the UK in the space of a fortnight.
On July 17, London Stock Exchange listed bwin.party entertainment plc accepted an £898 million bid from rivals 888 Holdings despite it being of lesser value than the big from GVC Holdings. A spokesman for GVC said the company is reviewing its option and that “GVC is not ruling anything in or anything out.”
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