The company will now pay roughly USD 4.4 B

GVC secures backing for Ladbrokes Coral deal

GVC will now pay roughly £3.2bn (USD 4.4 B) for Ladbrokes Coral in cash and shares after receiving 99.9pc backing from its shareholders for the purchase.
2018-03-09
Reading time 1:47 min
The online gambling firm has obtained backing for its third major purchase in five years, its Ladbrokes Coral deal, which is expected to propel the company into the FTSE 100.

GVC, the FTSE 250-listed firm, shocked the market last year with its bid for high-street bookmaker Ladbrokes Coral.

As reported by The Telegraph, industry experts expected mergers and acquisitions to be off the table until the Government had confirmed how much it would cut stakes on controversial fixed odds betting machines (FOBTs) by. The machines are a crucial part of profits in high street bookmaking stores and fears have been rising that ministers will slash the stake limit from £100 (USD 138) now to £2 (USD 3), something gambling firms say would lead to thousands of store closures.

But GVC created what some fund managers called a “genius” deal structure, which included a so-called contingent variable rate - effectively a sliding scale of how much the acquirer would pay for its target - based on the outcome of the Government review.

GVC will now pay roughly £3.2bn (USD 4.4 B) for Ladbrokes Coral in cash and shares after receiving 99.9pc backing from its shareholders for the purchase. It will pay nothing more if FOBT stakes are cut to £2 (USD 3) but the total deal value could rise to £4bn (USD 5.5) if the Government only reduces stakes to £50 (USD 70). The deal is expected to complete later this month.

The deal to buy Ladbrokes, one of the oldest names in British bookmaking with roots going back to 1886, will propel GVC into the FTSE 100 with a roughly £5.3bn (USD 7.3) market capitalisation, marking the latest stage in a huge rise in prominence compared to just a few years ago.

Back in 2013, the Aim-listed company - then worth roughly £100m (USD 138) - bought large rival Sportingbet and then in 2015 it secured a deal with Bwin after fighting off a bid from online gambling firm 888. The latter deal gave it a foot up to the FTSE 250.

At the start of 2018, GVC has smashed through the €1bn (USD 1.2) sales mark for the first time, helped by a string of bookmaker-friendly sporting results, which saw the industry keep a larger proportion of stakes than punters won.

The deadline for responses to the Government’s consultation on what FOBT stakes should be was in January but no firm date has been given for when a decision will be taken.

The options it outlined in the consultation consider whether to introduce a cap of £2, £20, £30 or £50, or make no change.

The machines have courted controversy for their high stakes and have been blamed for contributing to a rise in problem gambling.

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