Ladbrokes and Gala Coral plan merger to create UK’s largest chain of bookies

Ladbrokes is in early stage talks with rival Gala Coral over the merger of their high street and on

Ladbrokes is in early stage talks with rival Gala Coral over the merger of their high street and online betting businesses. - Credit: PA

Ladbrokes and rival Gala Coral today announced plans to create the UK’s largest gambling firm.

Ladbrokes said it was in early discussions with Gala to potentially merge, forming a business with nearly 4,000 high-street betting shops.

Shares in FTSE 250-listed firm Ladbrokes raced more than 10% higher in early trading, although 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.

If the deal goes ahead this time, it would see the merged group overtake William Hill as the biggest UK bookmaker, bringing together around 2,100 shops from Ladbrokes and 1,845 from Coral.

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.

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“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 talks are likely to see the update put back depending on the progress of the talks.

He said: “Since becoming CEO, 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.

“My plans are well advanced and I look forward to presenting them to shareholders.”

The merger talks do not include Gala’s 132-strong bingo business.

Gala Coral, whose high street betting shop business is headed by former HBOS chief executive Andy Hornby, is currently owned by private equity companies Cinven, Permira and UK-listed Candover Investments.

Mr Hornby said that, as well as the merger talks, the company was looking at “all strategic options”, including a possible flotation on the stock market.

It added: “There can be no certainty that the discussions between Ladbrokes and Gala Coral Group will lead to any agreement and Gala Coral Group remains confident in its future as a standalone business with highly attractive future potential.”

Gala Coral reported half-year revenues of £684.8million and underlying earnings of £135.4m in May.

Full year figures from Ladbrokes in February showed a 13.5% fall in profits to £98m in 2014.

Ladbrokes announced plans alongside the annual results to axe 60 betting shops as it continues to shake up its estate in readiness for an increase in taxation on gaming machines.

It warned of “significant headwinds” from the March 1 increase in machine gaming duty from 20% to 25% and the recent levy of a point of consumption tax.

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