Following almost 18 months of talks, two of Britain’s leading bookmakers, Ladbrokes and Coral, are about to complete a merger worth £2 billion. The two historical rivals will now become the biggest retail bookmaker in the UK and will be re-named Ladbrokes Coral Group plc.
In the process, the newly formed group will knock William Hill in to second place ahead of Paddy Power and Betfred in terms of high street outlets. It is also believed that privately owned Gala Coral, which is owned by Candover Investments, will dish out a potential windfall of £50 million among senior staff.
Ladbrokes Coral will be able to boast a portfolio of over 3,500 betting shops with around 25,000 staff and will now be listed on the London Stock Exchange. The company, which has revenues of £2.1 billion, saw a small increase in shares and will be headquartered in Stratford, London. Outside of the UK, Ladbrokes Coral is already the leading retail bookmaker in Ireland, Spain and Belgium and, thanks to Coral owning Eurobet, will also have an automatic strong presence in Italy.
Keeping It Competitive
The deal, which has taken 18 months to complete, was only ratified after the UK Competition and Markets Authority (CMA), who prevented the two from joining forces 17 years ago, were satisfied that a monopoly wouldn’t be an issue. To that end, Ladbrokes and Coral agreed to sell 359 of their shops to their rivals. Ladbrokes put up 185 shops while Coral offloaded a further 174. During the bidding process, Betfred and Stan James saw off competition from Boylesports and purchased the available properties for £55.5 million. Betfred collected 322 of the outlets while Stan James picked up the remaining 37.
Customers with accounts at either or both of these online operations, who have both seen strong financial growth this year, will not need to act as both firms will continue to be marketed separately and will retain their own separate websites. The group will be headed by Jim Mullen, the current Ladbrokes CEO, who had this to say;
“This is a historic day for the company and one which marks the start of an exciting journey for the business. Both Ladbrokes and Gala Coral have demonstrated their ability to compete hard and win in increasingly competitive markets.”
Ladbrokes Coral’s Chairman John Kelly said;
“In uniting these two businesses we are bringing together some of the best known and admired brands in betting and gaming. We believe that no other gambling business has such a strong heritage, with brands that enjoy such broad appeal and a presence that is woven into the fabric of the UK culture as well as overseas regulated markets.
Together, we have the opportunity to grow the business building on our scale, the digital opportunity we have in our markets, our international presence and through delivery of significant synergy savings. We have a strong management team in place and are already well placed to set about the creation of a new business with a clear focus on delivering the opportunities the completion of the merger offers us.”
Upon the completion of the deal, Carl Leaver will become Executive Deputy Chairman, Paul Bowtell will take over as Chief Financial Officer and Rob Templeman will be a Non-Executive Director.
An Industry Of Mergers
This latest deal is the most recent in a wave of mergers and acquisitions that the gaming industry has witnessed over the last couple of years. Paddy Power and Betfair completed their merger back in March, while GVC Holdings fought off competition from 888 to purchase Bwin last year. 888 were also thwarted in the bid to takeover William Hill, as were The Rank Group who were also forced to walk away empty handed. In 2018, The Stars Group, formerly Rational, purchased SkyBet for £3.4 billion.
Some of the motivating factors behind these moves are increased taxations and stricter regulation not to mention threats from new online rivals in an already saturated market place. Because of these reasons, many established betting companies are opting to merge or grow in order to either survive or solidify their position in the market.
Ladbrokes has been around since 1886 and started life as betting partnership between three Englishman at Ladbroke Hall in Warwickshire. By 1961, the UK legalised betting shops and a year later Ladbrokes purchased their first outlet and would go on to become the first retail chain bookmaker in the UK. As for Coral, they were originally founded in 1926 and are old hats when to comes to mergers after they signed an acquisition deal with bingo brand Gala in 2005 to become Gala Coral.