Ladbrokes bids to win support for £2bn merger after Dermot Desmond criticism
Ladbrokes has made a fresh bid to win investor backing for its merger with rival Coral after shareholders, including Irish businessman Dermot Desmond, voiced concerns about the deal as a vote on the tie-up looms.
In a stock market announcement, the FTSE 250 bookmaker reiterated “the compelling strategic rationale and benefits” of the £2bn tie-up. As well as creating a company that owns Britain’s biggest betting shop estate, Ladbrokes said it also had “the potential to deliver faster online growth” and generate “significant cost synergies”.
The bookie has been forced on to the defensive after Mr Desmond, a billionaire investor, issued an open letter to fellow shareholders urging them to block the merger, claiming it effectively marked “the death of Ladbrokes as an independent company”.
Mr Desmond holds a stake of between 2pc and 3pc in the gambling giant and believes the deal favours Coral’s shareholders, a group of private equity firms that include Apollo and Cerberus.
A top 10 investor has told The Daily Telegraph he shares some of Mr Desmond’s worries about the deal and would meet the Irish financier to hear his concerns ahead of Tuesday's vote.
The bookie responded to Mr Desmond’s attack by saying it was “confident that shareholders see the attraction of the proposed deal”, which will create a betting giant called Ladbrokes Coral.
More than 50pc of the votes cast at the general meeting need to be in favour of the Coral transaction for it to go ahead.
Ladbrokes reminded investors yesterday that its biggest shareholder, Playtech, could not vote on two of the resolutions because they relate to the gambling software company. Playtech, which holds almost 10pc of Ladbrokes, can vote on the merger, however.
Yesterday's long-awaited report into the collapse of HBOS in 2008 added further pressure on the two companies by implicating Andy Hornby, Coral’s chief operating officer, in the bank’s demise. Hornby, who was in charge of HBOS when it imploded, will stay on in his current role at Ladbrokes Coral should the merger complete.
Both Coral and Ladbrokes stuck by Mr Hornby yesterday. Coral said “he has played a central role in the transformation of the business and has earned the continuing support of our colleagues, management and shareholders”. Ladbrokes said: “We look forward to working with him.”