UK gambling operator Ladbrokes confirmed earlier today that it would merge with rival company Gala Coral to become the country’s largest betting chain and to blunt online competition from other gaming giants. Reports about the potential merger emerged late last month.
The new entity will be listed on the stock exchange and will be called Ladbrokes Coral Plc. Its stock market value will amount to about £2.3 billion. The headquarters of the enlarged business will be located in London. It is expected to generate annual net revenue of more than £2.1 billion.
Ladbrokes said in a statement from earlier today that it would issue new ordinary shares to the Gala Coral shareholders, with Apollo Global Management and Anchorage Capital Partners being among those. They will hold 48.25% of the combined business’ entire share capital. Existing Ladbrokes shareholders will own 51.75% of the new entity.
In order to fund the transaction, Ladbrokes is to place 93 million new shares or 10% of the company’s share capital. Once the acquisition deal is completed, the combined entity would become UK’s largest betting shop chain that would hold a 45% market share in an industry worth £3.1 billion. However, gaming analysts noted that the new gambling operator’s standing in the constantly growing online digital market would not be that pronounced. According to estimates, Ladbrokes Coral Plc would hold a 10% share in the country’s digital market.
It is important to note that Gala Coral’s bingo business would not be part of the merger.
Ladbrokes said that due to its latest purchase, its operating profit for 2015 would be £20 million lower than originally expected. Furthermore, the company would cut its dividend for this financial year to 3 pence compared to 8.9 pence from a year ago.
Jim Mullen, who was recently appointed as Chief Executive Officer of Ladbrokes, would lead the combined entity. He said that once the deal is completed, he would launch an “aggressive three-year investment program” so that the gambling operator establishes its customer base.
Carl Leaver, Chief Executive Officer of Gala, would be appointed as Executive Deputy Chairman. Andy Hornby, Chief Executive of Coral, would take the position of Chief Operating Officer of the new gambling company. However, he would not be member of the company’s board.
If the new company does not close any of its already established betting shops, it will have over 4,000 of them. However, the two companies said earlier today that they might dispose of some of their properties in order to satisfy the Competition and Markets Authority’s requirements.
