GVC Asset Sale Could Fund Another Bid for Ladbrokes Coral

GVC Holdings has announced the sale of Headlong Limited and its Turkish facing operations, prompting speculation that its preparing to make another play for Ladbrokes Coral.

GVC Kenneth Alexander.

GVC CEO Kenneth Alexander says the sale of Headlong Limited will allow his company to focus on regulated markets. (Image: sbcnews.co.uk)

Following reports of a 10 percent increase in Q3 revenue across its various gaming businesses, GVC has confirmed the sale of Headlong and its associated assets to Ropso Malta Limited. The deal, which is expected to be completed by the end of December 2017, is worth €150 million (£134 million) in cash receivable on a monthly basis over five years.

A Move Away from Grey Markets

The decision to offload its Turkish operations is part of GVC’s plan to have a greater presence in regulated markets and those markets that are on the cusp of a positive legal shift. With Turkey’s regulatory climate still classed as a “grey area,” GVC wanted to unlock some capital and filter it into new initiatives.

Market analysts expect the UK to be one of GVC’s main targets. Despite a presence in the UK with brands such as bwin.party and Foxy Casino, GVC has tried to secure deals with major operators on three occasions.

Alongside a push to acquire William Hill, GVC has made two bids to purchase Ladbrokes Coral. The latest offer came back in August when GVC was prepared to offer a reported 190p per share to secure Ladbrokes Coral’s network of live and online services.

Although the final bid wasn’t made public, insiders talking to the Financial Times said that the proposal was worth around £3.6 billion. However, despite offering above the company’s share price at the time, talks broke down.

Repositioning Could Rejuvenate Takeover Talks

Speculation surrounding the failed talks centred on GVC’s activities in grey markets such as Turkey. While this speculation wasn’t confirmed, analysts at Citi have estimated that GVC derives between 25 percent and 30 percent of its revenue from unregulated markets.

The sale of Headlong Limited is certainly a move designed to reduce this figure and, potentially, reignite talks with Ladbrokes Coral. Were a deal to be struck, the new entity would become one of the largest gambling companies in the world.

After it acquired bwin.party for £1.1 billion back in 2015, GVC quickly became a major player in the industry. If the Ladbrokes Coral deal could be finalised, GVC would take charge of more than 3,500 UK betting shops and company that turned over £1.5 billion in revenue in 2016.

For now, GVC will likely wait until the ink has dried on the sale of Headlong before potentially making an aggressive start to 2018.

Share Now: