Online gambling outfit GVC (GVC) has sealed the takeover of betting shops operator Ladbrokes Coral (LCL) in a deal worth as much as £4bn and creating a merged entity large enough to enter the FTSE 100.
Earlier this month, Isle of Man-headquartered GVC, off 9p at 925p in early dealings, confirmed long-run speculation by outlining bold proposals to buy Ladbrokes Coral, whose shares are bid up 1.2p to 175.2p on Friday.
SEEKING SCALE
Gaming companies are seeking greater scale in an industry that is shifting online and facing increased regulation.
Against this backdrop, Ladbrokes Coral’s board has recommended the takeover offer from e-gaming operator and ambitious industry consolidator GVC, which acquired Sportingbet in 2013, snapped up Bwin.Party in 2016 and has disposed of its non-core Turkish-facing business as part of an exit from unregulated markets.
GVC CEO Kenneth Alexander will lead ‘a fast-growing, diversified, international online and retail sports betting led gaming group with more than 90% of Net Gaming Revenue generated from locally regulated/taxed markets.’
The final price GVC, the income seekers favourite behind the Foxy Bingo, Bwin and Sportingbet brands, will pay is contingent on the outcome of the government’s review into fixed-odds betting terminals (FOBTs).
These are lucrative sources of revenue for the high street bookies yet often leave addicted gamblers nursing disastrous losses; the review could result in reduced wagers via these FOBTs and thus a drop in shop owners’ revenue.
Ladbrokes Coral shareholders will own 46.5% of the business and GVC shareholders 53.5% once the deal completes late on in the first quarter or early in the second quarter of 2018.
TRULY EXCITING PROSPECT
‘The creation of one of the world's largest listed sportsbetting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect,’ says Alexander.
‘In a dynamically evolving industry, the transaction creates an Enlarged Group with the scale, diversity, proprietary technology and management expertise to pursue many opportunities globally.’
SUPER SAVINGS
Today’s update serves to remind investors of the compelling rationale behind the mega-merger. Key takeaways include annual savings of ‘not less than £100m’, the combination of some of the strongest retail and online brands, including Ladbrokes, Coral, Gala, Foxy Bingo, Bwin.party, Party Poker and Sportingbet, not to mention the increased breadth and scale of a business better placed to lead further consolidation.
It will have top three market positions in three of Europe's largest online gaming markets - UK, Germany and Italy - plus a significant business in Australia and exposure to the USA and other growth markets, giving it the size and resources to address the dynamics of the rapidly changing global gaming industry.'
