GVC Closer to Ladbrokes Coral Deal Thanks to CMA Approval

The much-anticipated deal between GVC and Ladbrokes Coral is now another step closer to complete thanks to the Competition and Markets Authority (CMA).

Competition and Markets Authority

GVC /Ladbrokes Coral deal won’t hurt high street betting says Competition and Markets Authority (CMA). (Image: community-tu.org)

Following the news that GVC and Ladbrokes Coral shareholder had agreed to a deal worth a worth up to £4 billion, the CMA moved to review the possible takeover.

After announcing the inquiry on February 7 and closing it on February 21, the CMA gave a green light to two gaming operators on March 21.

Merger Won’t Hurt High Street Trade

The competition watchdog was initially concerned that the mega merger would adversely affect the landscape of Britain’s high street betting shops. With fewer distinct operators to choose from, the CMA felt there could be less choice for consumers and, therefore, a reduction in offers and services.

However, after reviewing the finer details of the proposal and considering GVC’s position in the market as a whole, the watchdog concluded that its takeover wouldn’t affect high street trade.

“GVC has a small presence in the UK and only offers services online. The CMA has found that GVC and Ladbrokes are not close rivals and there are many other providers of betting and gaming services online,” read the CMA’s report released on March 21.

With the CMA happy that GVC’s predominately online presence won’t cause problems in the UK, GVC and Ladbrokes Coral now need the blessing of the UK Gambling Commission (UKGC). Up until this point, the UKGC hasn’t given any indications that it is opposed to the deal.

However, it will have to formally approve the transaction before the two operators can begin the complex takeover process. Assuming the UKGC sanctions the merger, GVC will wait to see the result of the government’s overhaul of fixed odds betting terminals (FOBTs) before making its final offer.

FOBT Report to Define GVC Takeover

To protect itself against any major reductions in betting stakes, GVC put together an offer that included a sliding payment scale. Should the government decide to reduce the maximum FOBT stake from £100 to £2, GVC will pay £3.2 billion for Ladbrokes Coral.

In contrast, if the limit is set at £50, GVC will pay as much as £4 billion. The offers are designed to account for difference in revenue GVC will make from the betting shop terminals currently owned by Ladbrokes Coral.

Although the result of the FOBT review is pending, the UKGC recently gave its advice on the situation. Taking into account a variety of factors, including public opinion and consumer trends, the regulator recommended a maximum stake of £2 for FOBT slots and £30 for roulette games.

Should the government agree with its official gambling advisory body, GVC will have to pay close to £4 billion to acquire Ladbrokes Coral and become one of the largest gaming operators in the world.

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