Ladbrokes Coral in £3.9bn takeover talks with rival GVC

Shares in Ladbrokes Coral were up by more than a quarter in early trading despite uncertainty over the government’s consultation over fixed-odds betting terminals

Shares in Ladbrokes Coral were up by more than a quarter in early trading despite uncertainty over the government’s consultation over fixed-odds betting terminals

The outlook for these outlets is unclear pending the outcome of the government review of fixed-odds betting terminals.

According to today's press release, Ladbrokes stockholders are likely to be offered cash and shares equal to 160.9p a share, plus an uplift worth up to 42.8p a share depending on the outcome of the United Kingdom government's ongoing regulatory review.

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.

This is the third time in a 12 months when GVC Holdings has held merger talks with Ladbrokes Coral, which is now one of the largest bookmakers not only in the United Kingdom, but globally as well.

Kenneth Alexander, chief executive of GVC, will take the helm on the merged company if a deal goes ahead.

Now, as the United Kingdom government's ongoing regulatory review continues to cast a shadow over the gambling sector, it would appear that Ladbrokes' management is keen to get a deal done.

The news follows a wave of consolidation in the sector, which is going through a hard shift from high street betting shops to online gambling.

The deal would result in Ladbrokes Coral shareholders owning around 46.5 percent of the combined group and GVC about 53.5 percent.

"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. As Casino Guardian has previously reported, more and more countries have been focused on imposing stricter regulatory regime to their gambling markets as part of their attempts to tackle possible gambling-related harm.

Following its so-called triennial review, the government said in October that the maximum stake allowed on FOBTs could be sharply cut over concerns they fuel addiction. 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.

The news comes just a year after Ladbrokes and Gala Coral completed a merger.

A statement on the latest potential deal said the companies were "in detailed discussions regarding the possible combination of the two businesses". A larger company could have a greater competitive advantage versus sector peers.

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

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