Ladbrokes Coral Shareholders Offer Unanimous Backing to GVC Takeover

GVC Holdings has won the unanimous backing of Ladbrokes’ Coral shareholders and will now push ahead with the deal to acquire Britain’s biggest retail bookmaker.

Kenny Alexander

GVC chief Kenny Alexander has presided over a period of growth for GVC that will have seen its market cap grow by more than £5 billion in five years once its acquisition of Ladbrokes Coral is complete. (Image: EGRGlobal)

It’s a tie-up that will see GVC join Paddy Power Betfair in the FTSE 100 – the only two gambling operators in the list of the UK’s top 100 publicly listed companies – and will give the combined company roughly a £5.3 billion market capitalisation. Five years ago, its market cap was £100 million.

GVC has risen to become one of the biggest online gambling companies in the world through its apparently insatiable thirst for acquisitions in recent years – most notably Sportingbet in 2012 and in 2016.

It now owns some of the biggest brands in the sector, from partypoker to Foxy Bingo. But its ambitious move for Ladbrokes blindsided the industry, which had expected all M&A activity to cease while it awaited the results of the UK government’s interminable review of fixed-odds betting terminals (FOBTs).

FOBT Review Crucial  

The Ladbrokes acquisition represents GVC’s first foray into the land-based retail betting industry, which will be heavily affected by the results of the review.

The government will reduce the maximum stakes of FOBTs to £2, £20, £30 or £50, or maintain the status quo, although its widely believed the most drastic reduction available is on the cards.

Since the retail betting sector relies on the machines for more than 50 per cent of its revenues, Ladbrokes, as the operator with the most FOBTs, is more susceptible to the financial impact of a reduction than its competitors.

Sliding Scale Valuation

But GVC’s takeover proposal is based on variable scale of valuation, depending on the outcome of the Government review. Now it has received shareholder backing, GVC will pay $3.2 billion to acquire the company in a cash and paper deal. If FOBT stakes are cut to £2, it will pay no more, but if the stakes are only reduced to £50, Ladbrokes’ value could rise to £4 billion.

“I think we have got fantastic people at senior management level on both teams, great technology, great brands and we have got a fantastic opportunity,” said GVC chief Kenny Alexander, on the announcement of the deal late last year.

“It would be a very, very brave man or woman that would bet against us delivering shareholder returns based on our historical performance. I think we have done it before and I think we are definitely going to do it again.”

Share Now: