Ladbrokes Coral shares soar on GVC takeover approach

Cornelia Mascio
Dicembre 7, 2017

Ladbrokes Coral Group PLC (LON:LCL) and GVC Holdings (LON:GVC) are in "detailed discussions" about a possible merger to create an online global betting giant.

Shares in Ladbrokes soared 28% to 174.2p in early trading on Thursday, while GVC climbed 8% to 979p.

Based on share prices as at the close of business yesterday, the GVC offer values Ladbrokes Coral at 160.9p per share, which equates to a total equity value of £3.1bn (€3.5bn/$4.1bn).

GVC, which boasts 79 million registered accounts and operates in 21 languages through names such as sportingbet and partypoker, previously bought in 2016. The value of this would be determined by reference to the outcome of the current review of gaming machines and its estimated impact on the run-rate profitability of Ladbrokes Coral's United Kingdom business.

It is the latest move in a wave of mergers and takeovers in the gaming and betting industry and comes just a year after Ladbrokes (Amsterdam: LB6.AS - news) and Gala Coral completed a tie-up to form Ladbrokes Coral. The machines are big moneyspinners for companies like Ladbrokes but they have come under fire for leaving gamblers with very heavy losses.

The firms said: "The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector".

Both companies believe that the group would be geographically diversified with a large portfolio of businesses across both regulated and developing markets.

The last round of takeover talks broke down in August amid reported disputes about the respective value of the companies.

Under the terms of the offer, Ladbrokes Coral shareholders would be entitled to 32.7p in cash and 0.141 ordinary GVC shares for each Ladbrokes Coral share, and a potential further value of up to 42.8p structured as a contingent value right (CVR).

Isle of Man-based GVC said it expects the transaction will be "double digit" earnings per share accretive from the first full year following completion and after the results of the Triennial Review, even if the maximum bet on FOTBs is set at £2. Shares in Ladbrokes Coral closed Wednesday at 135.7 pence, giving a market capitalisation of 2.61 billion pounds.

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