Labrokes Coral in £3.9bn takeover talks with Foxy Bingo owner

07 December, 2017, 14:17 | Author: Leticia Walters
  • GVC owns a raft of brands including Sportingbet and Foxy Bingo

Ladbrokes Coral and GVC Holdings today said they were in "detailed discussions" about a merger.

GVC, whose brands include Sportingbet and Foxy Bingo, would pay cash and shares under the takeover which would see Ladbrokes Coral investors own 46.5% of the combined group.

Shares in the 230-year-old Ladbrokes jumped 26 percent in early trading, while GVC shares rose 6 percent on confirmation of the long-rumored offer, which is in cash and shares.

Keith Alexander, chief executive of GVC, would be expected to lead the combined group.

"The boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer", the statement said.

"The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector". 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. Young said the scale of a unified GVC and Ladbrokes would give the new company potential for further acquisitions.

Ladbrokes Coral and GVC are back in
Ladbrokes and GVC announce 'detailed' merger talks

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.

"GVC coming in before knowing the outcome of the all-important government review into the industry was probably an outside bet, ' said George Salmon, equity analyst at Hargreaves Lansdown, pointing to the 'significant chunk" of Ladbrokes Coral revenues from FOBTs.

Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November a year ago.

The tie-up would put the newly formed group in a strong position in major markets such as the UK, Italy and Australia, it added.

It announced last month that the maximum stake would be cut from £100 to between £2 and £50.

"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.

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