Ladbrokes and Gala Coral sell 359 shops ahead of merger

British Ladbrokes and Gala Coral said they agreed to sell 359 shops for 55.5 million pounds to rivals, in a deal which will reduce their footprint and pave the way for competition authorities to allow their merger to proceed.

The pair were told in July they must sell around 350 to 400 shops in order to obtain clearance for their proposed merger.

Ladbrokes agreed the terms of a 2.3 billion pound all-share merger with Coral in July 2015, and shareholders backed the deal in November.

Ladbrokes chief executive Jim Mullen said the sale of the shops “will clear the last significant hurdle to delivering on the merger with Coral, and paves the way for our focus on completion and quickly delivering on the opportunities the merger offers.”

In a note Davy said the CMA’s move to effectively force the bookmakers to sell the units had “immediately put them on the back foot when it came to negotiating a price”.

“A shortage of viable bidders was also a factor given that the CMA insisted that the buyers have demonstrable experience in running such shops.

“The valuation undoubtedly also includes a discount for regulatory uncertainty ahead of the pending review of gaming machines in the UK.

“We continue to believe that the combined entity will be stronger than its individual parts and therefore are supportive of this merger. However, the mood music in relation to UK machines remains ominous. Better to wait and buy when there is regulatory certainty, in our view.”

Under the shop sale deal, which is conditional upon completion of the merger, rival bookmaker Betfred will buy 322 shops for 55 million pounds, while Stan James will purchase 37 shops for 500,000 pounds.