The boards of GVC Holdings and Ladbrokes Coral announced that they have entered detailed negotiations in regards to a possible merger of the two companies. The discussions were given a start a non-binding proposal was sent from GVC Holdings to Ladbrokes Coral regarding a possible offer for the entire capital of Ladbrokes, which could end up with a combination of the businesses.
The merger talks are now on the table only a few months after similar negotiations failed in the summer. In case that the merger discussions are now successful, the deal is expected to create one of the biggest gambling behemoths on a global scale, with its possible market value being estimated to up to £5.7 billion.
As revealed by GVC Holdings in a statement published on the gambling operator’s website, the possible offer is expected to be structured as a scheme of arrangement in accordance to which GVC Holdings would acquire the entire capital of Ladbrokes Coral.
The two companies further revealed that they had discussed the total equity value that Ladbrokes Coral would be given as part of the merger agreement, with the British bookmaker’s total equity value amounting to up to £3.9 billion. Apart from that the two gambling operators also agreed that the current Chief Executive Officer of GVC Holdings – Kenneth Alexander – would assume the CEO role of the combined group in case that a merger agreement is reached.
Benefits to Be Brought if Merger Is Agreed
This is the third time in a 12 months when GVC Holdings has held merger talks with Ladbrokes Coral, which is currently one of the largest bookmakers not only in the UK, but globally as well. The company has approximately 3,500 high street betting shops. The previous negotiations between the two companies have been unsuccessful due to disagreements over the potential companies’ value.
Now, the Boards of GVC Holdings and Ladbrokes Coral have revealed their belief that a deal between the operators could create material shareholder value that would position the combined company as a leading gaming and betting business on a global scale. In addition, the two companies’ Boards further explained that after the merger, the gambling behemoth would be able to draw benefit from multiple brands and a multi-channel strategy, and it would be geographically diversified in both regulated and developing markets.
The announcement of the merger talks remains conditional, as the rest of the terms and conditions of the offer made by GVC Holdings need to be agreed on. The two companies would need their Boards’ final approval in order to complete the deal, too.
Merger Talks as UK Gambling Operators’ Consolidation Strategy
The possible merger between two of the largest players in the British and global gambling markets could come as a consequence of the consolidation process which has already started in the industry. As Casino Guardian has previously reported, more and more countries have been focused on imposing stricter regulatory regime to their gambling markets as part of their attempts to tackle possible gambling-related harm.
At the end of October, the UK Government revealed a crackdown on highly controversial fixed-odds betting machines which have been widely blamed for the constantly increasing number of gambling addicts. However, the machines are currently the biggest revenue source for bookmakers which run retail shops like Ladbrokes Coral
As a result of the industry crackdown, the Government’s DCMS revealed that FOBTs’ maximum stakes should be reduced from the current amount of £100 allowed. No final decision on the maximum stakes’ has been made, with the Government being expected to make an announcement in January 2018.
As mentioned above, the gambling companies in the UK have been preparing for further consolidation in the local betting industry for months now, with the dealmaking process being interrupted by the further regulatory measures imposed by UK authorities.