GVC, Ladbrokes Coral In Talks About Takeover Worth Up To £3.9B
Online betting group GVC is "back in talks" with Ladbrokes Coral about a takeover worth up to £3.9B ($5.25B), according to Martin Strydom of the LONDON TIMES. The companies are in "detailed discussions over an indicative cash and shares offer that values Labrokes Coral shares at about 160.9p." There is also a 42.8p share bonus that is "contingent on the outcome of a government consultation announced into fixed-odds betting terminals," known as the "crack cocaine of gambling." The Department for Digital, Culture, Media & Sport said when it announced the consultation in October that it would "cut the maximum stake on the machines," at present £100 ($134.66) every 20 seconds, but has "yet to decide on the final level," saying that it would be somewhere between £2 ($2.69) and £50 ($67.33). Besides the 42.8p contingent value right, the indicative offer includes 32.7p in cash and 0.141 of a GVC share for each Ladbrokes Coral share. If the limit on fixed-odds betting terminals is set at £50, Ladbrokes investors would get an extra 42.8p, at £20 ($26.93) it would be 30.3p and at £2 "they get nothing" (LONDON TIMES, 12/7). In London, Murad Ahmed reported it is the third time in a year that the internet gaming group has "held talks over a tie-up with Ladbrokes Coral," which has 3,500 high street bookmakers. The combined company would be led by GVC CEO Kenny Alexander, and the deal would "catapult it into the FTSE 100." Previous negotiations have "broken down due to disagreements over how to value the companies, an issue exacerbated by regulatory uncertainty in the gambling sector" (FINANCIAL TIMES, 12/7). The BBC reported the maximum price GVC will pay will "depend on the outcome of the government's review of gaming machines." Ladbrokes Coral shares "jumped" 23% on news of the talks, while GVC's were up by 4% (BBC, 12/7).