Ladbrokes Coral passes shareholder test

Ladbrokes Coral passes shareholder test

Tuesday, November 24, 2015 Totally Gaming
Shareholders gave their approval to the merger

Ladbrokes and Gala Coral now just need the agreement of regulators for their proposed £2.3bn (€3.2bn/$3.6bn) merger to be approved after the former’s shareholders voted in favour of the deal.

Some 90 per cent of shareholders backed the deal, which would create a combined ‘Ladbrokes Coral’ with projected net revenue of £2.1bn, operating profit of £392m and cost synergies of at least £65m.

Ladbrokes’ shareholders gave their backing despite vocal opposition from Dermot Desmond, the Irish billionaire who owns around three per cent of the company. Last week he published an open letter urging shareholders to block the deal, arguing it favoured Coral’s private equity owners, which include Apollo and Cerberus. 

Desmond held meetings with about six institutional investors in the bookmaker, representing approximately 20 per cent of the company’s share register, according to The Daily Telegraph newspaper.

In response, the deal was publicly backed by Richard Buxton, the chief executive of Old Mutual Global Investors, which owns around 5.5 per cent of the company and is believed to have initially persuaded the Ladbrokes board to enter into talks with Gala Coral.

“We’re very supportive and I’m pretty sure that the other serious investors on the register are, too,” Buxton said.

TotallyGaming.com reported earlier this month that Ladbrokes and Gala Coral are in preliminary talks with the UK’s Competition and Markets Authority (CMA) about their proposed merger, with an investigation almost certain to take place.

Ladbrokes and Gala Coral reached their merger agreement in July, when it was announced that Ladbrokes would issue new stock to the shareholders of Coral representing 48.25 per cent of the company, with Ladbrokes members owning 51.75 per cent.

Reaction to the deal was mixed with analyst Nomura describing the deal as “defensive”. Ladbrokes’ share price has fallen by more than 10 per cent since the merger was announced.

A merger between the two companies was halted by the UK regulator in 1998 over fears it would damage competition in the UK market.

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