Competitions Authority to Review GVC and Ladbrokes Coral Deal

The proposed merger between GVC and Ladbrokes Coral may take longer than expected after the Competition and Markets Authority (CMA) launched an inquiry into the deal.

CMA GVC Inquiry

CMA launches an inquiry into how a mega merger between GVC and Ladbrokes Coral would affect the UK betting industry. (Image: gov.uk)

Announced on February 7, the CMA’s review will look into whether GVC’s takeover would lead to a lessening of competition in the UK’s gambling sector.

As part of the process, interested parties have been invited to comment on the transaction and whether they believe it will damage the industry.

CMA Wary of Mega Mergers

When the public phase of the inquiry closes on February 21, the CMA will assess the evidence and, potentially, set out a course of action that has to be followed before the transaction is authorised.

Prior to the 2016 merger between Ladbrokes and Coral, the CMA identified 642 factors that could harm local competition. Following the report, Ladbrokes Coral agreed to sell almost 400 betting shops in an effort to reduce its high street presence and allow for greater competition among the top operators.

If GVC is successful in its £3.9 billion bid to purchase Ladbrokes Coral, it would instantly become one of the largest gambling operators in the world. Based on this, the CMA wants to ensure that competition isn’t reduced to a point that could leave consumers with a worse service.

GVC Bosses Have Hurdles to Clear

News of a potential merger between GVC and Ladbrokes Coral broke back in November 2017.

“The Boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer,” read GVC’s November 7 press release.

Confirmation that GVC would indeed make a third bid for Ladbrokes Coral came in December before an outline plan was sent out to shareholders in January 2018. At this stage, those with a stake in GVC are deciding whether to accept the board’s plan and greenlight the deal.

Before the CMA announced its plan to review the takeover, GVC bosses predicted the deal could be complete by the end of Q1 or early in Q2. However, with the initial phase of the CMA investigation set to conclude on April 6, at least one of those deadlines will pass.

Indeed, given the regulator’s concerns prior to the Ladbrokes Coral deal, there’s a strong chance it will demand some concessions from both parties before they can complete their mega merger.

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