Published: Fri, December 08, 2017
World | By Melba Underwood

Ladbrokes Coral in £3.9bn takeover talks with rival GVC

Ladbrokes Coral in £3.9bn takeover talks with rival GVC

Under UK regulation, GVC is required, by not later than 5pm on 4 January next year, to either announces its firm intention to make an offer for Ladbrokes Coral or to announce that it does not intend to do so.

The cash and stock deal would value the bookmaker at up to £3.9bn.

The two firms, whose previous unsuccessful deal discussions leaked in August, said in a joint statement on Thursday they were in detailed talks over a takeover that would give Ladbrokes shareholders around 46.5 percent of the combined group.

Ladbrokes has almost 3,700 bookies on the high street and more than 25,000 staff, while GVC has a raft of brands after a series of acquisitions, most recently snapping up bwin.party in February past year.

"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 final price could reach £3.9 billion, depending on the outcome of a government review into controversial fixed-odds betting terminals (FOTBs).

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".

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On Nov. 2, GVC struck a deal to offload its Turkish business, which had been an obstacle in talks with Ladbrokes Coral because of the risks associated with operating in a country where many forms of gambling are banned.

Shore Capital has retained Ladbrokes Coral Group Plc (LON:LCL) to Buy in a report released on 12/07/2017.

"This triennial review has run and run and run and with the political climate in the United Kingdom who knows how much longer it may well run for?" he said.

Last year Paddy Power merged with its digital rival Betfair and Ladbrokes merged with Gala Coral.

Alexander said buying Ladbrokes Coral would not leave GVC over-exposed to declining betting shops.

He added: "As long as GVC was willing to pay the right price, the tie-up has always made sense - the Isle of Man firm has little debt and has the global and fast-growing online presence, LCL has the physical footprint, high street name and sports book".

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

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