THE PROPOSED £2.3 billion merger between Ladbrokes and Coral hinges on the companies selling up to 400 high street branches.
The Competition and Markets Authority (CMA) provisionally found that the deal could lead to a lessening of competition in 659 local areas but has indicated a reduction in high street presence would be sufficient remedy.
The merger would elevate the Ladbrokes Coral Group beyond William Hill to become the biggest bookmaker in the UK. The combined group would have more than 4,000 licensed betting offices (LBOs) in the UK, compared to William Hill’s 2,400.
In Scotland Ladbrokes operates 330 LBOs to Coral’s 151. William Hill has 311 LBOs in Scotland.
The combined group would see current Ladbrokes chief executive officer Jim Mullen assume the same role, with former HBOS and Alliance Boots chief executive Andy Hornby as chief operating officer, the role he currently has at Coral.
Martin Cave, chairman of the CMA inquiry, said that the discounts and offers of free bets made to individual customers in response to local competition could be threatened by the merger. “We’re also concerned that such a widespread potential reduction in competition at the local level could worsen those elements that are set nationally such as odds and betting limits,” he added.
In a statement, Ladbrokes said it believed the provisional findings represented a significant step in the merger process.
“Our focus now will continue to be to work with the CMA to progress the merger to focus on finding a suitable buyer or buyers in order to deliver the necessary remedies,” it said.
The companies have been given to June 6 to respond to the CMA’s provisional findings and a final ruling on the merger is expected by the end of July.
Ladbrokes and Coral said the deal would give rise to several opportunities, including the potential to deliver faster online growth
Gala Coral said it would continue to work with the CMA to meet its requirements, adding: “The CMA has indicated that the sale of 350-400 LBOs would enable a final determination in favour of the proposed merger.”
Ladbrokes and Coral said the deal would give rise to several opportunities, including the potential to deliver faster online growth and the delivery of significant synergies.
Gala Coral is currently owned by a group of private equity firms having been rescued from collapse in 2010. Under the terms of the merger, Ladbrokes shareholders will own 52.75 per cent of combined company with the PE firms taking the remainder.
Gala Coral chief executive officer Carl Leaver will serve as executive deputy chairman for a fixed period of 12 months post-completion, where he will be responsible for delivering the planned synergies.
Celtic owner Dermot Desmond in November urged fellow Ladbrokes shareholders to block the merger in an open letter that said “The real winners in this transaction are the Coral shareholders. Make no mistake – this is a zero premium acquisition of Ladbrokes by Coral.”
Ladbrokes shares surged eight per cent on the CMA’s announcement.
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