Ladbrokes Coral and GVC return to table for £3.9bn takeover talks

Ladbrokes Coral and GVC return to table for £3.9bn takeover talks

The fast-growing online betting group GVC is back in talks with Ladbrokes Coral about a takeover worth up to £3.9 billion.

GVC, the Isle of Man, owns online betting portals such as Bwin and Sportingbet.

Ladbrokes Coral was created out of the merger of Ladbrokes and Gala Coral in November past year.

GVC and Ladbrokes Coral Group have today (Thursday) revealed that they have held "detailed discussions" over a possible merger agreement.

Shares in Ladbrokes jumped almost 30% on the news during early trading in London.

The value of the CVR, which would be satisfied by the issue of loan notes by GVC, will be determined by the outcome of the UK's ongoing Triennial Review relating to the regulation of Category B2 fixed-odds betting terminals (FOBTs) and its estimated impact on the run-rate profitability of Ladbrokes Coral's United Kingdom business.

A joint statement said: "The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector".

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Both companies believe that the group would be geographically diversified with a large portfolio of businesses across both regulated and developing markets.

Analysts and executives had expected the government review to spark a new round of consolidation but they had expected any deal to come after the final conclusion was handed down.

The review is part of a government crackdown on FOTBs after MPs raised concerns the machines were too addictive and fuelled problem gambling. In October it started a 12-week consultation to consider cutting the stake to between 50 pounds and 2 pounds, from the current 100 pound wage.

Based on a closing GVC price overnight of 911.5p and 135.65p for Ladbrokes, the offer would values Ladbrokes Coral at £3.1bn or 160.9p per share, with the CVR of up to 42.8p per share potentially taking the total value up to £3.9bn.

GVC expects the deal to boost earnings from its first full year after completion, even if the Government decides on the biggest possible curbs on gaming machines.

He highlighted that Playtech may see some potential impact on one of its most important licensees, with its stake in Ladbrokes Coral worth close to 80p per share.