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GVC to Offer £4 Billion in a Ladbrokes Coral Takeover Bid
- December 25, 2017 By Oliver Young -
In recent years, many gambling and betting operators have merged with other companies, and this consolidation trend is pretty obvious in the UK. Generally, companies decide to merge when they wish to lower their expenses, primarily their overhead expenses, thus increasing their profits. Stakeholders, and particularly shareowners agree to mergers because they often feel that the increased profits may also lead to increased dividends.
In 2015, Gala Coral merged with Ladbrokes following the previous merger between Gala and Coral. Other companies have also merged, Paddy Power and Betfair became Paddy Power Betfair following a massive £5 billion merger and there were several merger and takeover talks and negotiations between various companies that didn’t end in a successful deal.
GVC Will Control the New Entity
Now, it appears that 2018 might become with another massive takeover deal. Namely, it has been suggested that GVC Holdings, one of the largest betting companies in the world will attempt to takeover Ladbrokes Coral and the deal could be worth a total of £4 billion. Reports suggest that representatives of both companies have already met and discussed the deal.
The two companies previously attempted to merge on two occasions, and earlier in the summer of 2017, their talks collapsed due to the uncertainties linked to the Government’s plan to change certain aspects of gambling legislation.
If this takeover bid is successful the newly formed company will be one of the largest online gambling organisations in the world. The new company will control both Ladbrokes’ retail and online operations, as well as all brands that are currently under GVC, including a number of popular websites such as PartyCasino, Foxy Bingo and Sportingbet.
The plan is for GVC to control more than 53% of the new entity and the companies CEO, Kenneth Alexander, is supposed to remain in charge of the new organisation.
Some have interpreted this takeover bit as a reaction to the plans to decrease the wagering maximums on fixed odds betting terminals which have been called ‘crack cocaine’ of the industry.
Ladbrokes Coral Board to Accept the Offer
There is a strong reason for optimism that the proposed takeover will go through, as the chairman of the other implied operator – Ladbrokes Coral, expressed his belief that the deal would be good for both companies and that it will help them to increase their online growth, create a more diverse portfolio and permit them to improve customer support.
John Kelly of Ladbrokes Coral also added that the deal will give the new entity a chance to use the best people from both management teams which would enable them to create a team of diligent managers which would be able to cope with the situation and drive the company’s profits.
The board of Ladbrokes Coral is in favour of the acquisition and will definitely accept the offer. Estimates show that the new entity could save up to £100 million per year, as a direct result of the merger. The deal will be worth about £3.2 billion, but it could potential grow up to £4 billion. Each shareholder of Ladbrokes Coral share will receive almost 33p in cash per share, 0.141 GVC shares and an entitlement of almost 43p.