The UK Competition and Markets Authority is set to review the proposed acquisition of major gambling operator Ladbrokes Coral by GVC Holdings. Local media reported that the watchdog will be accepting comments on the deal by February 21 and will announce its decision on April 6.
The CMA will have to determine whether the proposed combination between the two companies will have negative impact on competition in the field.
GVC Holdings had reportedly approached Ladbrokes Coral on previous occasions but consolidation talks had fallen through. The two companies confirmed that they have renewed takeover discussions in early December 2017. It was announced later that month that Ladbrokes Coral has agreed to a takeover by its online gambling counterpart.
The deal would value the major British company at between £3.2 billion and £4 billion. The final price will be determined once the UK Government announces the outcome of its probe into the highly controversial fixed-odds betting terminals.
Following the completion of the merger between Ladbrokes and Coral in 2016, the combined entity, Ladbrokes Coral, became UK’s largest high street betting shops operator and the owner of the largest number of FOBTs.
British MPs are expected to announce their decision on how much the maximum stake accepted by the gambling devices would be cut anytime now. Recent media reports suggested that the stake would be reduced to £2 from £100. Any reduction would weaken Ladbrokes Coral’s retail gambling performance significantly. According to gambling experts, the company would look to strengthen its online business in a bid to offset the losses it would suffer from the pending FOBTs crackdown.
It is believed that was the actual reason behind Ladbrokes Coral’s decision to eventually accepted GVC’s offer. The latter company is one of the powerhouses in the online gaming and betting space at present as it is present in multiple markets in different parts of the world.
Here it is also important to note that prior to completing their £2.3-billion merger Ladbrokes and Coral were subjected to a lengthy review from the CMA, which ended with the regulator ordering the two companies to sell 359 betting shops and thus prevent the high concentration of facilities operated by one and the same owner.
What’s Next for Ladbrokes Coral’s Takeover by GVC?
With the CMA due to announce its evaluation of the competition impact the deal would have in early April, the actual takeover is expected to be completed during the first half of the year. Here it is important to note that Ladbrokes Coral will no longer exist as a corporate entity and will instead be part of the GVC group together with other major brands, including bwin and partypoker.
Ladbrokes Coral will own 46.5% of the combined entity once the deal is finalized. Thus, GVC, which is headquartered on the Isle of Man and currently employs 2,800 people, will add 3,500 betting shops to its thriving online business and will be joined by Ladbrokes Coral’s 25,000 employees.
It is believed that the takeover would create synergies of around £100 million over a three-year period. More than half of the savings are expected to come in the third year after the completion of the takeover.
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