The massive wave of consolidation that has been seen in the UK gambling market over the past few years and of which Casino Guardian has already reported on several occasions, does not seem to be slowing down. The end of March once again saw a demonstration of the quickly-changing nature of the local gambling industry, with two of the largest betting operators joining forces in a single entity.
The last days of March 2018 saw one of the largest deals in the UK gambling market, with the takeover agreement between GVC Holdings and Ladbrokes Coral being finalised. Less than year and a half after Ladbrokes and Gala Coral completed their merger on November 1st 2016, the company formed by two of the oldest and largest players on the gambling is becoming part of a company which was established only less than two decades ago.
So, it seems that the consolidation efforts of gambling operators in the UK are still on the agenda, with the operators trying to stay strong in order to face the stricter rules that are being imposed by gambling regulators.
Two Previous Attempts of GVC Holdings Fail
The acquisition of Ladbrokes Coral by GVC Holdings was not an easy process. The Isle of Man-based gambling operator first made an acquisition offer for Ladbrokes in 2016, but at the time the latter was primarily aimed at finalising its long-awaited £2.2-billion merger with Coral, so the negotiations fell apart.
The summer of 2017 saw GVC Holdings make its second takeover bid for Ladbrokes Coral, which was estimated to about £3.6 billion. As reported by Casino Guardian at the time, two sources familiar with the matter explained that the takeover negotiations had failed.
At first, Isle of Man-based GVC Holdings valued its rival company at approximately £2.7 billion, but it later offered an additional amount of money, boosting its takeover offer to approximately £3.6 billion.
It was at the time when GVC Holdings made its first two attempts to take over Ladbrokes and Ladbrokes Coral, respectively, when market analysts shared their opinion that the trend of gambling market consolidation is to be reigning the industry over the years to come, with more gambling groups trying to deal with the negative impact that stricter regulatory rules could have on their performance.
Ladbrokes Coral Possible Merger Options
In September 2017, rumours have emerged that Ladbrokes Coral started to consider possible merger options in order to deal with the stricter rules that were planned to be imposed by UK gambling regulatory authorities.
The Government’s gambling industry review saw the wave of consolidation in the UK gambling sector become stronger, with more operators being focused on dealing with the possible negative effect that could be inflicted on their performance by eventual clampdown on the industry. The industry crackdown would imminently have effect on gambling operators, including on the larger ones such as Ladbrokes Coral. Taking into account the fact that the combined company had more than 3,600 betting outlets in the UK, a possible clampdown on the fixed-odds betting terminals (FOBTs) would have hit the operator badly. In case that the UK Government makes a decision to slash the maximum stake allowed at fixed-odds betting machines, the combined company would have been among the companies that would have been most affected by the stricter regulatory rules.
At the time when the company was rumoured to have started considering possible merger options, GVC Holdings looked like one of the most logical choices. Previously, there were some speculations about a Tabcorp Holdings merger, but no agreement was made in the end. In addition, only a month after the merger between Ladbrokes and Gala Coral was finalised, the combined company was reported to be considering another takeover deal, this time of the sports betting assets of Tatts Group.
GVC and Ladbrokes Takeover Deal Gets CMA Approval
This year, the latest takeover attempt of GVC Holdings to acquire Ladbrokes was finally successful. The deal was estimated to £4 billion and was cleared by the UK competition regulatory authority – the Competition and Markets Authority (CMA) – last month, after the shareholders of both companies greenlighted the merger. The country’s competition watchdog conducted an investigation of the proposed deal and after the checks were completed, it revealed that no competition concerns that could have prevented the agreement from happening had been found.
At the time when it announced its decision on the proposed merger, the Competition and Markets Authority explained that GVC Holdings has a relatively small presence in the UK and offers only web-based services. The investigation held by the CMA did not found close rivalry between GVC Holdings and Ladbrokes Coral, and also proved that there were many other betting operators available online, so the competition in the UK gambling market would not be harmed by the completion of the two companies’ deal.
What the Competition and Markets Authority paid special attention on, were individual sports and games. Still, the competition regulator’s investigation found that even with the deal between GVC Holdings and Ladbrokes Coral carried out, there would be enough rivals to the combined entity that would guarantee that no price increases or reduction in the services’ quality would be made.
How Would the Merger Affect the Gambling Market?
As mentioned above, the merger between two of the largest players on the UK gambling industry came as a further wave of consolidation in the local gambling market. The two companies now form a combined entity that would have both strong land-based and online presence in the country, with approximately 3,600 betting shops and combined employee base of about 26,800 individuals.
With the completion of the deal, GVC Holdings gets customer base from over 35 countries, including from the three largest online gambling markets, including the UK, Italy and Germany. In addition, it would get a significant presence in Australia and the US, especially if the latter sees sports betting legalised.
This would definitely make it easier for the newly-formed gambling company to face the tighter regulations that European and international jurisdictions seek to impose on gambling operators. On the other hand, the GVC Holdings’ merger with Ladbrokes could also have effect on some countries’ and territories’ economies, such as the one of the Isle of Man.
Considering the fact that GVC Holdings is based on the Isle of Man, the presence of the combined entity there would be enormous. The massive takeover deal is estimated as one of the largest ones in the economy of Isle of Man, with the takeover being considered as a massive booster for the local market. The Government is to probably gladly welcome the newly-formed company, so the situation would be good for both the operator and the Isle of Man economy.