Ladbrokes Coral aims for quick resolution with competition regulator

Ladbrokes Coral aims for quick resolution with competition regulator

Friday, July 24, 2015
Jim Mullen will be CEO of the new combined company

Ladbrokes has said that it wants to engage with the UK’s competition authority “at an early stage” after announcing the completion of its £2.3bn (€3.2bn/$3.6bn) merger with rival with Gala Coral

This morning (Friday), Ladbrokes said that the newly-formed ‘Ladbrokes Coral’ entity is expected to boast annual net revenue of £2.1bn as well as earnings before interest, tax, depreciation and amortisation of £392m. The deal comes a month after Ladbrokes announced talks with Gala Coral’s owners, which include Candover Investments, Cinven and Permira.

The combined company, which is predicted to create £65m in synergies, will rely on the green light from the Competition & Markets Authority, and a Ladbrokes source told TotallyGaming.com that it expects to be forced to sell some of its 4,000 retail outlets.

“We'll be looking to engage with the CMA from an early stage,” the source said. “We anticipate that we will have to sell some shops from the combined entity but wouldn't want to prejudge the CMA’s timeline or process.

“We believe some of the numbers anticipated in the media about the number of shops likely to be involved are overstated.”

Ladbrokes chief executive Jim Mullen will take the same role with the combined company, while Gala Coral chief executive Carl Leaver will lead delivery of synergies as executive deputy chairman.

Controversially, reports say that former HBOS chief executive Andy Hornby will become chief operating officer – the Coral Retail chief executive’s first appointment with a publicly-listed company since he played a role in the banking group’s collapse in 2008.

Ladbrokes chairman Peter Erskine added: “This is a major strategic step for Ladbrokes which firmly accelerates our strategy to improve the customers' experience and build recreational scale. Together, we will create a leading betting and gaming business combining strong brands with an attractive multi-channel offering and an extensive national and international coverage.”

Ladbrokes said it will issue new ordinary shares to existing Gala Coral shareholders representing 48.25 percent of the enlarged company. Existing Ladbrokes investors will own 51.75 percent on the same basis.

Software developer Playtech – which has deals with both Ladbrokes and Coral - will receive £75m in shares and cash as an early determination of amounts due to it under a marketing services agreement.

Gala Coral chairman Rob Templeman added: “This strategic combination is a natural fit and will offer further opportunities for growth. Together, the two businesses will have a strong digital presence with market-leading technology, innovation and access to significant resources to drive continued growth and deliver enhanced returns for all shareholders.”
 

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