Shareholders back Ladbrokes move as Desmond fears a 'deal too far'
Published 25/11/2015 | 02:30
Ladbrokes won shareholders' backing for its planned merger with Gala Coral, despite opposition from Irish financier Dermot Desmond.
Over 96pc of votes cast were in favour of the deal.
Mr Desmond told fellow shareholders that the Ladbrokes board and management are "not good enough" and said that the company's performance over the last five years has been abysmal.
He said the merger "could be a deal too far for Ladbrokes shareholders".
"The company's total debt burden will increase by four times to £1.2bn.
"Given the increased exposure to a declining and increasingly regulated retail sector, Ladbrokes will encounter significant and growing challenges in servicing these levels of debt."
He said the company's total profit before tax had fallen by 40pc in the last five years.
The deal will need to be assessed by the UK's Competition and Markets Authority (CMA).
Mr Desmond said that would involve "a negotiated settlement between Ladbrokes and the authority that could see the mandatory disposal of a material amount of the retail estate - estimated by analysts at between 400 and 1,000 shops and up to as much as £70m in lost EBITDA. "In truth, the scale and cost of these disposals is totally unknown."
Ladbrokes chairman Peter Erskine acknowledged "there were things we could have done differently", but he said the Coral merger was the best way to gain the scale needed to succeed online. Ladbrokes agreed the £2.3bn all-share merger during ther summer to give it the clout to make a bigger splash online, where it has been outgunned by rivals.
It is one of a series of deals in the gaming sector, which has been hit by higher taxes and tighter regulation. Ladbrokes announced the terms of the deal with Coral, owned by group of private equity companies including Apollo, Anchorage and Cerberus, in July.
After the meeting, Mr Desmond called the board's approach "a slap in the face to the shareholders" and said he would continue the fight. "This is only the first round of 15 rounds," he said. He said that one option would be to convene another shareholders' meeting, for which he would need the support of the holders of 5pc of the shares. (Additional reporting Reuters)