Ladbrokes wins shareholder approval for Coral merger despite Dermot Desmond's protests
The billionaire financier said proposed merger with Coral was 'a deal too far'
Published 24/11/2015 | 10:47
Ladbrokes won shareholders’ backing for its planned merger with Gala Coral, despite opposition from financier Dermot Desmond.
Chairman Peter Erskine said proxy votes in favour of the deal had been received in respect of 700 million shares, enough to carry the vote with around 1 billion shares in issue.
Earlier Mr Desmond told fellow shareholders that Ladbrokes management was “not good enough” and the company’s performance over the last five years has been abysmal.
Speaking at a general meeting called to vote on the bookmaker’s proposed merger with Gala Coral, the billionaire financier 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,” Mr Desmond said. 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.
"I recognised from the outset that the Board would likely already have sufficient proxies to carry the vote at today’s meeting. However, it is clear to me from my discussions with the major shareholders that there is strong support for the requirement for the Board to return to the Shareholders once the CMA negotiations are finalised,” he said.
“I therefore call on the Board to agree today not to disenfranchise its shareholders and to convene a General Meeting to put any deal negotiated with the CMA before us for our approval.