GVC Holdings and Ladbrokes Coral – The story so far

After securing a near majority approval of its shareholders to proceed with the proposed acquisition of Ladbrokes Coral Plc, GVC Holdings has further receivgo-aheado ahead of its investor counterparts at the FTSE100 betting  group.

The transaction is now set to be forwarded on to the United Kingdom’s High Court for final judgement (target date 23 March)

It has, however, been a long road to get to this point, with potential takeover speculation arising in the City of London as far back as December 2016.

By mid 2017 it was reported that FTSE-listed GVC had failed with a bid, which valued Ladbrokes Coral group assets at £2.7 billion, with a proposed incentive of 50p per share, pricing its bid at £3.6 billion.

In early December of last year the online gaming group informed that “detailed discussions” were ongoing between the parties, with a view to forming “the outright UK gambling market leader.”

Ladbrokes Coral detailed the acceptance of the terms of a GVC bid a few days before Christmas, containing a contingency entitlement based on the results of a government review into the maximum stakes of Fixed Odds Betting Terminals (FOBTs).

The initial bid, equating to £3.2bn (160.9p per share), is based on a FOBT maximum stake outcome of £2, and would rise in increments towards £4bn, which would represent a £50 judgement, depending on the final outcome of the review.

Under the terms of the deal GVC, who also operate the bwin, Sportingbet and Party Gaming brands, would own a 53.5% majority of the proposed merged group.

Labelled as a “bold and ambitious” bid by analysts, current GVC CEO Kenneth Alexander is in line to occupy a similar role in the enlarged organisation, which it was confidently stated would create “a fast-growing, diversified, international online and retail sports betting led gaming group.”   

Whilst it was also added that in accordance with London’s City code on acquisitions and takeovers, upon completing the merger with GVC Holdings, Ladbrokes Coral will suspend its premium listing as a FTSE enterprise.

Following the commencement of a Competition and Markets Authority (CMA) review into the takeover, in particular whether “a substantial lessening of competition” could ensue, a £1.4bn debt syndication deal was revealed by GVC for its intended debt-financed takeover.

Announcing a ‘Lien Term B’ debt-bond, comprising Sterling, Euro and US Dollar, GVC also stated that through the restructured debt syndication it will gain access to a £550m multi-currency revolving credit facility.

The debt proceeds will be used to “satisfy the cash consideration payable to Ladbrokes Coral Shareholders,” should all final hurdles be cleared.

GVC will also further use refinanced proceeds to clear certain Ladbrokes Coral debt obligations, deal costs and expenses.

In its Ladbrokes Coral prospectus, published earlier this year, GVC stated it will seek to implement a number of key strategic enlargement initiatives, with fast growth and profits for investors key:

  • Diversified strategy focusing on scale within regulated markets
  • Establish leading UK operations with a complementary international revenue base
  • Creation of a true global gaming & betting enterprise
  • Developing market leading scalable technology systems
  • Clear group focus on sports betting
  • Strong emphasis on combined synergy creations

Further advantages highlighted are the strengths of leadership combination, and the importance of technology ownership to help achieve effective multi-channel distribution combined with high flexibility and scalability across all verticals.

After being given the go ahead from both parties, the High Court is scheduled to give its final verdict on Monday 26 of this month.

Speaking as GVC published its FY2017 results, Alexander commented: “The importance of geographic diversification is also a key dynamic given the evolving regulatory backdrop.

“Thus the acquisition of Ladbrokes Coral Group represents an exciting opportunity, bringing together industry-leading online and retail brands. There will be plenty of hard work ahead, but we are confident that GVC will deliver once again.”

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