Ladbrokes Coral shares soar on GVC takeover approach

Ladbrokes

Ladbrokes and Gala Coral completed a merger last year

Based on a closing GVC price overnight of 911.5p and 135.65p for Ladbrokes, the offer would values Ladbrokes Coral at £3.1bn or 160.9p per share, with the CVR of up to 42.8p per share potentially taking the total value up to £3.9bn.

GVC, which owns Bwin and Sportingbet among other brands, has proposed a possible takeover offer for the entire issued and to be issued share capital of Ladbrokes.

In a joint statement, the two groups said they were in detailed talks over a deal that would give Ladbrokes Coral shareholders around 46.5% of the combined group, with GVC shareholders holding the rest.

It would also get a potential further value of up to 42.8p, depending on the outcome of the United Kingdom government's Triennial Review into fixed-odds betting terminals (FOTBS) and its impact on profits.

The possible offer for Ladbrokes Coral would include 32.7p per share in cash as well as 0.141 GVC shares for each Ladbrokes Coral share.

Isle of Man-based GVC, which has grown rapidly into one of Britain's biggest online gambling companies, and high street-based Ladbrokes held talks about a deal earlier this year but they broke down without agreement.

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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".

The transaction will also enhance the enlarged group's position in a number of the world's largest regulated iGaming markets including the UK, Italy and Australia, significantly increasing GVC's current share of revenues from locally regulated or taxed markets to more than 90 per cent.

Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November past year.

In November, GVC sold its Turkish business for up to €150mln to Ropso Maltato to pave the way for potential merger with Ladbrokes Coral. Last year GVC bought Btwin.party, while Ladbrokes and Coral merged.

"We think the combination makes sound strategic sense given the significant synergies" of 70 million to 100 million pounds, amounting to 15 percent to 20 percent of pro forma pretax profit, Morgan Stanley analyst Ed Young wrote in a note.

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