GVC Holdings PLC and Ladbrokes Coral are in detailed discussions regarding a merger of the two companies. GVC have put forward a proposal to acquire shares in Ladbrokes Coral in a deal that values the group at between ?3.1bn and ?3.9 bn.
The groups have held talks regarding a possible takeover previously this year. However, negotiations broke down owing to disagreements over how to value the group. This was closely linked to the government?s review into the gambling industry. A key factor in the review is linked to Fixed Odds Betting Terminals (FOBTs).
In October, the UK Department for Culture, Media and Sport completed the first stage of its review into controversial FOBTs. The outcome resulted in a government crackdown on FOBTs, reducing the existing betting limits on the machines to between ?2 and ?50. The final decision regarding maximum limits will be made in January.
The maximum limit will directly impact profitability for Ladbrokes Coral. As such, the proposed takeover offer from GVC has built in a condition which includes a share premium related to the government?s decision.
GVC have offered to pay 160.9p for each share in Ladbrokes Coral, which values the company at ?3.1bn. This would be the value in the case that a maximum FOBT stake of ?2 is implemented. In the event that the limit ranges between ?5 and ?50, a CVR will be paid for each share. Should the maximum stake of ?50 be implemented, the value per CVR will be 42.8p. This gives the offer a range of a minimum of ?3.1bn (160.9p per share) and a maximum of ?3.9bn (203.7p per share).
The proposed acquisition comes at the end of a successful year for GVC, that was topped off with winning prestigious industry awards. The EGR awards are the egaming industry?s premier awards and the group picked up two coveted titles.
Fighting off competition from the best online casinos in the industry, including many of those featured at https://www.bestcasino.uk/, GVC picked up the title of Casino Operator of the Year. This was awarded to GVC in recognition of excellent performance in the casino sector. This included the addition of unique in-house content as well as more than 650 new games from third-party providers. The acquisition and overhaul of bwin.party amongst other brands was quoted as a significant factor in achieving the award.
The group also won the title of Poker Operator of the Year for its flagship poker brand partypoker. The judges commented that ?Partypoker recorded phenomenal growth rates in absolute terms but it was even more impressive given the perceived structural decline of poker market. Management clearly focused on revamping product supported by live tours and strong brand push after a period of neglect.?
The acquisition of the Ladbrokes Coral Group by GVC would create a leading global gaming company, with the largest number of high street bookmakers and a significant share of the online gambling market. GVC has until 4th January to announce a firm intention on whether or not to make an offer to acquire Ladbrokes Coral.