Ladbrokes Coral and GVC are back in "detailed" takeover talks

Ladbrokes Coral

Gambling giant Ladbrokes is in "detailed" talks over a takeover by online rival and Foxy Bingo owner GVC in a deal worth up to £3.9bn. GVC shareholders would be entitled to the rest.

It would see Ladbrokes Coral shareholders own around 46.5 per cent of the combined group and GVC around 53.5 per cent.

Shares in the 230-year-old Ladbrokes jumped 26 percent in early trading, while GVC shares rose 6 percent on confirmation of the long-rumoured offer, which is in cash and shares. The value of this would be determined by reference to the outcome of the current review of gaming machines and its estimated impact on the run-rate profitability of Ladbrokes Coral's United Kingdom business.

The government has said the maximum stake allowed in FOBTs could be sharply cut over concerns that the terminals fuel addiction.

The firms said: "The enlarged group would be an online-led, globally positioned betting and gaming business that would benefit from a multibrand, multichannel strategy applied across some of the strongest brands in the sector".

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The combined group would have beefed-up operations across some of the world's biggest regulated online gaming markets, including the UK, Italy and Australia.

In a joint statement, the two firms said GVC's chief executive Kenneth Alexander would be the boss of the enlarged group. There could also be synergies from the deal, while the Board of GVC also believes that the transaction would be double digit EPS accretive from the first full year post-completion.

Ladbrokes completed its £2.3bn merger with Coral in November previous year, but it is understood GVC first approached Ladbrokes over a tie-up when it was finalising the deal.

In a statement, Ladbrokes Coral said it has received a non-binding proposal from GVC for a potential offer for the entire issued and to-be issued share capital of the business. Turkey had presented a roadblock in GVC's quest to buy Ladbrokes Coral since it is an unregulated market and vulnerable to sudden clampdowns.

"GVC's recent move to exit Turkey cleared the last barrier and LCL shareholders should be pleased to see the firm is now better insulated against the vagaries of the United Kingdom market", said Neil Wilson, senior market analyst at ETX Capital.

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