Newspaper article The Journal (Newcastle, England)

Gamble to Create Biggest Bookmaker with Merger; GAMBLING

Newspaper article The Journal (Newcastle, England)

Gamble to Create Biggest Bookmaker with Merger; GAMBLING

Article excerpt


LADBROKES shares jumped yesterday as investors cheered plans for a PS4bn merger with Gala Coral despite competition concerns over the tie-up to create Britain's biggest bookmaker.

FTSE 250-listed Ladbrokes saw its shares leap 20% at one stage after it said it was in early discussions with Gala to merge, forming a business with nearly 4,000 high-street betting shops.

The combined group would overtake William Hill as the biggest gambling firm in the UK, with experts estimating it would be worth close to PS4bn. It would bring together around 2,100 shops from Ladbrokes and 1,845 from Coral.

But the deal raises possible competition concerns over a tie-up between the second and third largest bookmakers in Britain and brings back memories of an attempt by Ladbrokes to snap up Coral 17 years ago. Ladbrokes tried to buy its smaller rival in 1998, but was forced to give up after the then British trade and industry minister Peter Mandelson said the deal had to be unwound on competition grounds and fears it would disadvantage punters.

One analyst said the two firms may be forced to sell as many as 15% of the shops to appease competition authorities.

Ladbrokes said the merger talks related to Coral Retail, the UK bookies business, Gala Coral's 870-strong Eurobet division in Italy and Coral's online arm.

Jim Mullen, chief executive of Ladbrokes, said: "A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies' shareholders.

"The board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms."

Mr Mullen, who was promoted to the top job three months ago, was due to unveil his keenly anticipated strategy review for Ladbrokes on June 30, but the update is likely to be put back depending on the progress of the merger talks.

He said: "Since becoming chief executive, my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes. …

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