Ladbrokes set for shop sale to close on £2.3bn Gala Coral merger

Ladbrokes set for shop sale to close on £2.3bn Gala Coral merger

Friday, May 20, 2016 Totally Gaming
The two companies must dispose of up to 400 LBOs if they are to be allowed to merge

Ladbrokes is to focus on selling shops across the UK after the national competition regulator said its proposed merger with Gala Coral will only be allowed to proceed if the companies dispose of up to 400 LBOs.

The Competitions and Markets Authority (CMA) has provisionally ruled that the £2.3bn (€3bn/$3.4bn) deal may cause competition concerns in a large number of local areas. It has identified 659 local areas in which the merger could lead to a loss of competition, which could in turn lead to a “worsening of the offer made to customers at both a local and national level”.

The CMA said it “is minded to require any divestiture, were that to be a suitable remedy, to be substantially completed before the merger can go ahead”. The two companies currently have around 4,000 licensed betting offices in the UK, and would become the country’s biggest retail operator should they be allowed to merge.

Despite the prospect of losing a sizeable portion of its retail presence, a Ladbrokes spokesperson told TotallyGaming.com that the company will now aim to meet the CMA’s requirements. 

"This is a significant milestone and our focus now will be on completing the shop disposals that the CMA have indicated they require,” said the spokesperson.

The CMA’s competition concerns are related only to the combined entity’s retail operations, with inquiry chair Martin Cave explaining that a company that so dominated the marketplace in some areas would be detrimental to customers.

Cave added: “Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a large number of customers still choose to bet in shops - and many would continue to do so after the merger.

“For these customers, competition comes from the choice of shops in their local area and it is they who could lose out from any reduction of competition and choice. Discounts and offers of free bets to individual customers are ways betting shops respond to local competition which could be threatened by the merger. We’re also concerned that such a widespread potential reduction in competition at the local level could worsen those elements that are set nationally such as odds and betting limits.”

Ladbrokes’ share price was up more than 10 per cent today (Friday), and is closing in on the company’s highest mark of the year so far.

TotallyGaming.com says: “Despite a negative response from many, including some prominent shareholders, Ladbrokes’ response today highlights its determination to make this deal happen.”

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