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Sunday 18 August 2019

Desmond's final plea to Ladbrokes shareholders as Playtech deals sour

Investors are expected to vote in favour of the deal to merge Ladbrokes, above, with Coral. Photo: Chris Ratcliffe/Bloomberg
Investors are expected to vote in favour of the deal to merge Ladbrokes, above, with Coral. Photo: Chris Ratcliffe/Bloomberg
John Mulligan

John Mulligan

Billionaire financier Dermot Desmond will this morning engage in a last-ditch effort to persuade shareholders at Ladbrokes to reject a planned €3bn merger with Coral.

But his pleas are unlikely to sway investors, with signs pointing to a vote at the meeting in London that will swing in favour of the deal, which was first announced during the summer.

A spokesman for Mr Desmond confirmed over the weekend that he does not expect to block the merger, but wants to "raise the level of discourse with shareholders".

His address to Ladbrokes' shareholders comes as the gambling group's single biggest shareholder, Israeli software firm Playtech, yesterday called time on a planned £460m (€656m) takeover of spread betting firm Plus500.

Playtech also said that a planned $105m (€99m) acquisition of Dublin-based contracts-for-difference broker AvaTrade is also being shelved following opposition revealed last month from the Central Bank. It did not specify what the objections were.

AvaTrade was founded by and is owned by Israeli investors. Playtech will lose a $5m deposit it paid to AvaTrade and said it will continue to appeal the Central Bank's decision to oppose the transaction.

Playtech, which owns almost 10pc of Ladbrokes, said it has called off its pursuit of Plus500 because it doesn't believe it will be able to assuage regulatory concerns. Playtech had already received approval for the deal from the Cyprus Securities Exchange Commission, but it was having a more difficult time with the UK's Financial Conduct Authority (FCA), which has raised issues over the deal.

Playtech had set a deadline of finalising the acquisition by December 31, a target it said it won't now be able to meet.

"Having considered its position over the weekend, the board of Playtech is now of the view that the steps being proposed to address these concerns will not sufficiently satisfy the FCA to enable Playtech to obtain the FCA's approval by December 31," Playtech said. It said it has no immediate plans for its 9.9pc stake in Plus500.

Playtech provides software to Ladbrokes and to rivals Paddy Power and William Hill.

Mr Desmond slated Playtech's involvement in Ladbrokes last week, and how the firm will be further entrenched in the merged Ladbrokes-Gala gambling firm.

"Playtech cements its position as key technology supplier to both Coral and Ladbrokes, in addition to receiving a £75m settlement of an incentive payment despite the failure of Ladbrokes' digital division to achieve the recovery which the 2013 Playtech deal had promised," Mr Desmond claimed.

Mr Desmond owns over 2pc of Ladbrokes, but less than 3pc. He has held a stake for nine years and received additional shares in Ladbrokes when he sold his Betdaq betting exchange in 2013 for up to €43m.

Mr Desmond claimed that the merger - which he said is effectively a reverse takeover of Ladbrokes by Coral - is being championed by the company's chairman, Peter Erskine, and chairman designate, John Kelly.

"They have led Ladbrokes down the disastrous path to a deal that is effectively the death of Ladbrokes as an independent company," Mr Desmond claimed.

Irish Independent

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