GVC Holdings entered talks to takeover British bookmaker Ladbrokes Coral last December, but they quickly broke down. Fast forward a year, and those talks have started again. If a takeover is in the cards, the deal could be worth £3.9 billion ($5.24 billion).
Dollars and Pence
If GVC Holdings, which is based in the Isle of Man, were to absorb Ladbrokes Coral, two companies who recently merged themselves, they would hold 53.5 percent of the new group. Furthermore, Kenny Alexander, current CEO of GVC Holdings, would become chief executive of the combined group.
“We’ve come along in a fairly short period of time,” Alexander said. “We’re very proud of what we’ve achieved.”
According to current talks, GVC Holdings would pay 160.9p/~$2.00 per Ladbrokes Coral share, which values the company at £3.1 billion/$4.1 billion.
That bid is dependent upon a government triennial review of gaming machines (i.e. fixed-odds betting terminals), which are set to have capped stakes set by the Department of Culture, Media and Sport. Right now, such machines offer a max bet of £100 ($132) but could be cut somewhere between £2-£50 ($3-$67).
However, a deal could still go through prior to the review completion, albeit with stipulations. If the gaming terminal review does not impose betting-limit restrictions, a “contingent value right” has been set at 42.8p per share, meaning that would be added per share. Taking that into account, a potential deal is valued at £3.9 billion ($5,235,360,000).
“This triennial review has run and run and run and with the political climate in the UK who knows how much longer it may well run for?” Alexander continued. “You can only sit and wait for so long.”
Such a deal would see GVC Holdings enter the British retail gambling market by acquiring roughly 3,500 betting shops, which would put it in direct competition with William Hill and Paddy Power Betfair.
Will a Deal Happen?
GVC Holdings currently has until Jan. 4 to either make a formal offer or withdraw. Experts predict an offer is in the cards.
“GVC got lucky at the third attempt and Ladbrokes Coral shareholders can count their winnings,” said Neil Wilson, senior market analyst at ETX Capital.
“Whilst this deal was always likely, most had thought GVC would wait until the government’s triennial review of fixed odds betting terminals was finished before it would happen.”
According to Stockbroker Davy, Ireland’s largest stockbroker, the deal makes sense strategically as “it creates an online and retail gaming company of enormous scale and should lead to material synergies.”
While a deal hasn’t been finalized, it didn’t stop shares from jumping. GVC Holdings experienced a reported 4-6 percent increase, while Ladbrokes Coral jumped 23-26 percent.
Ladbrokes Coral currently owns several brands including Gala Casino, Gala Bingo, Eurobet, Betdaq, and Sportium. Meanwhile, GVC’s gaming brands include Bwin, Partypoker, and Partycasino.