GVC closes Ladbrokes takeover in USD 5 B

GVC owner of the Sportingbet, Bwin and Foxy Bingo brands has announced its desire of purchasing bookmaker Ladbrokes Coral for up to USD 5.35, which would give creation to one of Britain’s largest businesses. In a recent press statement, GVC's CEO Kenny Alexander declared he believes the combined group will achieve a recurring annual pre-tax cost synergies of over USD 118 million.

Despite declarations from GVC that it will pay 32.7 pence in cash and 0.141 new GVC shares for each Ladbrokes share, the final price is yet to be settled. The criteria followed to do so will be based on the outcome of a review into fixed-odds betting terminals (FOBTs), the moneyspinners which have recently received criticism for leaving gamblers with heavy losses. The final outcome of the review is expected in the second half of January to settle the maximum amount that can be wagered at a betting terminal.

This would be the biggest wager yet by GVC's CEO Kenny Alexander, who would become chief executive of the conglomerate. It may be worth noting that Alexander has built GVC through a series of increasingly ambitious deals, including the USD 1.3 billion reverse takeover of Bwin.Party, growing it from an upstart gambling firm to a FTSE 250 business. “The creation of one of the world’s largest listed sportsbetting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect,” Alexander said in a statement.

The deal would also bring GVC’s into British retail gambling through its acquisition of approximately 3,500 betting shops, making it the biggest player on the high street and direct competitor of William Hill and Paddy Power Betfair. GVC’s offer values Ladbrokes Coral at 164.4 pence per share, equating to a total equity value of around 3.2 billion pounds, plus a contingent fee of up to 42.8 pence a share, meaning the bookmaker could be valued at about 4 billion pounds.

On its part, Ladbrokes Coral, which beat William Hill as the country’s largest bookmaker after merging with Coral last year, recorded USD 950 million in revenue from gaming machines in 2016. Ladbrokes is sharing traded 0.6 percent higher at 175.1 pence by 0815 GMT, while GVC slipped 0.7 percent to 927p.

The tie-up comes against a backdrop of tightening regulation in the British gambling industry which has grown to a multi-billion pounds sector over the last decade since The Gambling Act 2005 liberalised rules and allowed companies to use TV advertisements for promoting sports betting, online casinos and poker.

The deal is expected to close late in the first or early in the second quarter of 2018, GVC said.