HIGH street bookmaker Ladbrokes Coral has reopened talks about a takeover by online rival and Foxy Bingo owner GVC in a deal worth up to £3.9 billion.
Shares in Ladbrokes raced as much as 34 per cent higher after the pair revealed "detailed" discussions over a tie-up that would see GVC pay £3.1 billion in cash and shares for Ladbrokes.
The final price could reach £3.9 billion, depending on the outcome of a government review into controversial fixed-odds betting terminals (FOTBs).
The talks come after two previous attempts at a deal between the pair, with the most recent discussions breaking down in the summer over price and amid uncertainty ahead of the Government's gambling review.
The deal would create an online-led global gambling giant, combining Ladbrokes' high street and online operations with GVC's stable of brands, including Sportingbet and PartyCasino.
Under the terms of the potential takeover, GVC would own around 53.5 per cent of the enlarged group and its chief executive, Kenneth Alexander, would take the reins.
But the firms said plans for the final management line-up would be worked out over the coming weeks.
They 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."
GVC has said it would be prepared to offer up to £3.9 billion if the review of FOTBs sees the maximum stake cut from £100 to £50.
But many in the industry believe it could be slashed to £20 or even as little as £2, which would see the value of the takeover offer fall to the minimum of £3.1 billion.
It comes amid a wave of consolidation in the sector, which has been under pressure pending the review, which is expected to significantly cut earnings from the lucrative betting machines.
Ladbrokes completed its £2.3bn merger with Gala Coral in November last year, but it is understood GVC first approached Ladbrokes over a takeover when it was finalising the deal.
GVC - whose shares rose around eight per cent after the talks were announced - said it expects "material synergies" from a merger with Ladbrokes, which it would lay out in any forthcoming firm offer.
The combined group would have beefed up operations across some of the world's biggest regulated online gaming markets, including the UK, Italy and Australia.
Neil Wilson, senior market analyst at ETX Capital, said: "GVC got lucky at the third attempt and Ladbrokes Coral shareholders can count their winnings."
He added: "As long as GVC was willing to pay the right price, the tie-up has always made sense - the Isle of Man firm has little debt and has the global and fast-growing online presence; Ladbrokes Coral has the physical footprint, high street name and sports book."
Ladbrokes has nearly 3,700 bookies on the high street and more than 25,000 staff, while GVC has a raft of brands after a series of acquisitions, most recently snapping up bwin.party in February last year.
GVC employs 2,800 employees and contractors throughout 15 offices globally.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here