Finance

GVC closes in on Ladbrokes Coral takeover at third attempt

GVC closes in on Ladbrokes Coral takeover at third attempt

"Whilst this deal was always likely, most had thought GVC would wait until the government's triennial review of fixed odds betting terminals was finished before it would happen".

Shares in Ladbrokes jumped almost 30% on the news during early trading in London.

Ladbrokes Coral and GVC Holding said that Thursday's announcement does not amount to a firm intention to make an official offer.

GVC, which owns the Bwin and Sportingbet brands, would hold 53.5 per cent of the combined group.

Both sides have agreed GVC's chief executive Kenneth Alexander would take charge of the combined group.

The review is part of a government crackdown on FOTBs after MPs raised concerns the machines were too addictive and fuelled problem gambling.

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.

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The takeover terms value Ladbrokes Coral at £3.1bn, rising to a maximum OF £3.9bn depending on the outcome of the review by the Department of Digital, Culture, Media and Sport. It started a 12-week consultation to consider cutting the stake to between 50 pounds and 2 pounds, from 100 pounds now.

"Against this it does bring in some geographic risk in GVC notably around Germany following the exit from Turkey, whilst the cash elements, we estimate worth £600m and £800m (max for the triennial review element), are more the comfortable from the existing balance sheet and future cash generation". Although there has not been a firm offer, the two companies appear to be positive about the potential for a deal to be done. A takeover of Ladbrokes by GVC would create one of the largest gambling companies in the world.

"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.

It is the latest move in a wave of mergers and takeovers in the gaming and betting industry and comes just a year after Ladbrokes (Amsterdam: LB6.AS - news) and Gala Coral completed a tie-up to form Ladbrokes Coral.

Ladbrokes Coral - which operates 3,500 shops across England, Wales and Scotland - would receive 32.7p in cash and 0.141 ordinary GVC shares for each Ladbrokes Coral share.

"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.


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