Ladbrokes and Gala Coral in mega-merger talks
Two UK heavyweights in discussions over combination which would create online firm with revenues of approximately £400m
Ladbrokes and Gala Coral are in talks over a potential merger which if completed would create a combined entity big enough to rival the leading UK online brands.
In response to a story published by the Racing Post last night, Ladbrokes chief executive Jim Mullen (pictured) this morning issued a statement to the market confirming Ladbrokes was in discussions with Gala Coral over a possible merger with Coral Retail, Eurobet Retail, and Gala Coral’s online businesses.
“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,” Mullen said.
“My plans are well advanced and I look forward to presenting them to shareholders. 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,” he added.
Mullen, who replaced Richard Glynn in April, had planned to present his new business plan to analysts and investors on 30 June but this date is now in doubt due to the ongoing talks.
The proposed combination, if completed, is likely to be classified as a reverse takeover of Ladbrokes with the enlarged business to be traded on the main market of London’s Stock Exchange.
Any deal would see the combined firm propelled in to the top tier of the UK online market in terms of market share.
In 2014, Ladbrokes posted online revenues of £215m while Gala Coral, in the 12 months to 27 September 2014, recorded online revenues of £182m, which combined puts it on a par with the £394m posted by Paddy Power in 2014, although still behind the £527.4m recorded by William Hill.
However, a deal could make the Ladbrokes-Gala Coral partnership one of the biggest online fixed-odds brands in the UK, with the two businesses deriving circa 90% of revenues from the UK market.
Ladbrokes share price this morning surged on the news, and was up by 10% to 134p. Meanwhile Playtech, which provides both the Gala Coral and Ladbrokes software saw its share price remain relatively unchanged.