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Ladbrokes Coral and GVC are back in "detailed" takeover talks

Ladbrokes Coral and GVC are back in

The last round of takeover talks broke down in August amid reported disputes about the respective value of the companies.

A deal would see Ladbrokes Coral shareholders own 46.5% of the combined group with GVC holding the rest.

Based on a closing GVC price overnight of 911.5p and 135.65p for Ladbrokes, the offer would values Ladbrokes Coral at £3.1bn or 160.9p per share, with the CVR of up to 42.8p per share potentially taking the total value up to £3.9bn.

The Ladbrokes Coral Group PLC (LON:LCL) (LCL.L) share price has risen 25% today after it announced that it is in detailed discussions regarding a potential combination with GVC Holdings PLC (LON:GVC) (GVC.L).

GVC chief executive Kenneth Alexander is expected to lead the combined group, although the firms said plans for the final management line-up would be worked out over the coming weeks.

Ladbrokes has almost 3,700 bookies on the high street, while Isle of Man-based GVC has a raft of brands after a series of acquisitions, most recently snapping up bwin.party in February previous year.

It would also mark GVC's entry into British retail gambling through its acquisition of approximately 3,500 betting shops, making it the biggest player on the high street and competing with William Hill and Paddy Power Betfair.

Shares in Ladbrokes jumped by 26 percent, while GVC shares rose 6 percent on confirmation of the potential offer, which is for 32.7 pence in cash and 0.141 GVC share per Ladbrokes share.

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The move comes as gambling groups face tougher regulation, with the government set to crack down on fixed odds betting terminals (FOBTs).

GVC has said it would be prepared to offer up to £3.9 billion if the review of FOTBs sees the maximum stake cut from £100 to £50.

Ladbrokes Coral added: "Any transaction would also enhance the enlarged group's position in a number of the world's largest regulated online gaming markets, including the UK, Italy and Australia, and would significantly increase GVC's current share of revenues from locally regulated/taxed markets to more than 90 per cent".

"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.

Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November past year. A larger company could have a greater competitive advantage versus sector peers.

But he said that GVC's pricing hedge "makes sense", as did the strategic rationale for the deal.

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


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