Online bookie takes punt on Ladbrokes with €4.4bn offer
Online gambling company GVC Holdings is in talks to buy Ladbrokes Coral for up to £3.9bn (€4.4bn) in a long-awaited deal that would transform it into a bastion of British betting.
GVC's bid marks the biggest wager yet by Kenny Alexander, who would become chief executive of the combined group, which is expected to be large enough to enter Britain's FTSE 100 index.
Since becoming chief executive a decade ago, the Scot has built GVC through a series of increasingly ambitious deals.
They include the £1.1bn reverse takeover of Bwin.Party, growing it from an upstart gambling firm to a FTSE 250 business.
Stockbroker Davy said the deal made sense strategically, adding that "it creates an online and retail gaming company of enormous scale and should lead to material synergies".
Houlihan Lokey and Investec are advising GVC on the deal, while Ladbrokes Coral is working with Greenhill and UBS.
Mr Alexander's latest acquisition would see GVC, which operates Sportingbet, Partypoker, and Foxy Bingo, swallow up the 130-year-old Ladbrokes brand, as well as Coral and Gala.
It would also mark GVC's entry into British retail gambling through its acquisition of approximately 3,500 betting shops, making it the biggest player on the high street and competing with William Hill and Paddy Power Betfair.
"We've come along in a fairly short period of time, we're very proud of what we've achieved," Mr Alexander said.
Talks between GVC and Ladbrokes Coral, led by CEO Jim Mullen, have been "on and off" for about a year, Mr Alexander revealed.
The two firms, whose previous unsuccessful deal discussions leaked in August, said in a joint statement yesterday they were in detailed talks over a takeover that would give Ladbrokes shareholders around 46.5pc of the combined group.
Shares in Ladbrokes jumped by 26pc, while GVC shares rose 6pc on confirmation of the potential offer, which is for 32.7 pence in cash and 0.141 GVC share per Ladbrokes share.
GVC's move comes at a pivotal moment for the British gambling industry, which is undergoing a UK government review.
The final price that GVC pays will depend on the outcome of this review into fixed-odds betting terminals (FOBTs), which are big moneyspinners for companies like Ladbrokes but have come under fire for leaving gamblers with very heavy losses.
The UK government said in October that the maximum stake allowed on FOBTs could be sharply cut over concerns they fuel addiction. It could cut the stake to between £50 and £2, from £100 currently.