The boards of Ladbrokes and Coral have managed to agree on a merger deal which will create ‘a leading multi-channel and internationally diversified business with a compelling strategy to accelerate online growth, deliver substantial synergies and drive value’.
Ladbrokes Coral plc will have net revenue of £2.1 billion and £392 million of EBITDA (excluding cost synergies of at least £65 million) and a pro forma market capitalisation of c.£2.3bn. The deal will see Ladbrokes shareholders own 51.75% of the enlarged company with Gala Coral shareholders issued with 48.25% of the share capital.
Peter Erskine, Chairman of Ladbrokes, said: “This is a major strategic step for Ladbrokes which firmly accelerates our strategy to improve the customers’ experience and build recreational scale. Ladbrokes and Coral are two highly complementary businesses, with rich heritage and brand presence across the UK and internationally.
“Together, we will create a leading betting and gaming business combining strong brands with an attractive multi-channel offering and an extensive national and international coverage. The transaction will provide an attractive opportunity to generate considerable value for both sets of shareholders, through significant operating synergies and a strong cash flow profile.”
Rob Templeman, Chairman of Gala Coral, added: “Today’s announcement is testimony to the track record and achievements of the Gala Coral team in delivering a significant transformation of the business over the past four years. This strategic combination is a natural fit and will offer further opportunities for growth. Coral Group’s online strength and high street presence will complement Ladbrokes’ established brand and footprint in the UK and internationally.
“Together, the two businesses will have a strong digital presence with market leading technology, innovation and access to significant resources to drive continued growth and deliver enhanced returns for all shareholders.”
The new betting giant will be led by Ladbrokes CEO Jim Mullen, with Gala Coral CEO Carl Leaver operating as Executive Deputy Chairman for a term of 12 months post Completion. John Kelly OBE, Senior Independent non-Executive Director of Ladbrokes and former CEO and chairman of Gala Coral, will be non-Executive Chairman. Paul Bowtell, CFO of Gala Coral, will be CFO. The Board will include one non-Executive Director from the Ladbrokes Board, one from the Gala Coral Board (who will be Rob Templeman) and a further three Independent non-Executive Directors to be selected jointly in due course.
Completion is conditional upon, inter alia, the approval of Ladbrokes’ existing shareholders and clearance from the Competition and Markets Authority (the “CMA”). Both Ladbrokes and Gala Coral are confident that the Merger is deliverable and are committed to working closely with the CMA in its review.
A statement said: “The CMA will have jurisdiction to assess the deal under the UK Merger Regime and the deal is conditional upon clearance. The competitive dynamic has changed dramatically since the 1998 MMC Report and there is now significantly more competition from the online and mobile segments, from betting exchanges and on the high street, in particular with Betfred and Paddy Power growing aggressively in recent years.
Ladbrokes and Gala Coral will engage early with the CMA and will work closely with it to ensure a successful outcome to the process. That said, both parties expect to make retail store disposals to satisfy any competition issues. The parties will use their best endeavours to ensure that any suggested remedies continue to deliver value to shareholders and realise the benefits of the Merger.”