Breaking Down the GVC and Ladbrokes Coral £4bn Merger

Written by: Richie Delaney | January 18th, 2018

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Breaking Down the GVC and Ladbrokes Coral £4bn Merger

It has been announced that the iGaming conglomerate, GVC Holdings, a global provider to the online gaming and betting industry and owners of major brands like Party and bwin, has agreed to a £4bn merger deal with Ladbrokes Coral, the UK's leading bookmaking operator thanks to the Ladbrokes and Coral betting sites.

As a part of the deal, GVC has valued Ladbrokes Coral and it's array of entities, including a whole range of Gala products also owned by Coral, at 160.9p a share, with added loan notes at an extra 42.8p per share. Both companies confirmed that the merger would result in cost savings of at least £100m a year.

Breakdown Of The GVC and Ladbrokes Coral Deal

The takeover makes GVC the majority owner, with 53.5% of the group, while Ladbrokes Coral shareholders own 46.5%. Chief Executive of GVC Kenneth Alexander is heading up the united group. Ladbrokes Coral shareholders are entitled to 32.7p in cash, 0.141 ordinary shares in GVC and a conditional entitlement of up to a further 42.8p.

Unsurprisingly, both companies are waiting for the UK government’s long-awaited triennial review into the gambling industry outcome before confirming the acquisition cost. The deal comes at a time when Ladbrokes is releasing new product functions and aiming to consolidate retail and online operations through digital means.

GVC employs 2,800 staff in 15 offices internationally. Ladbrokes has over 3,700 betting shops and employs more than 25,000 staff in and around the UK. GVC has only operated online previously, and so the merger deal will see them enter unknown territory with regards to Ladbrokes retail operations.

Merger To Result In Massive Savings

Under the agreed deal, GVC has valued the firm at 160.9p a share, with additional loan notes included at an extra 42.8p per share. The companies said the merger would result in cost savings of at least £100m a year. Commenting on the merger agreement on GVC’s website, Kenneth Alexander, CEO said:

"The creation of one of the world’s largest listed sports betting companies, combining a portfolio of established brands, proven technology and leading market positions in multiple geographies, is a truly exciting prospect. GVC has a proven track record of creating shareholder value through the successful integration of acquired businesses and the GVC Board believe this transaction will create further value for our shareholders and those of Ladbrokes Coral."

Chairman of Ladbrokes Coral, John Kelly, also spoke happily of the deal:

"The Ladbrokes Coral Board believes that the proposed combination with GVC accelerates our strategy to improve the customer experience, drive faster online growth and build a more diverse and extensive international portfolio of businesses. The acquisition has compelling strategic rationale allied to an opportunity to use the best of both from proven management teams and will create material shareholder value. It secures earlier delivery of our long-term value potential, which is why the Board of Ladbrokes Coral has unanimously recommended GVC's offer."

GVC Revenue To Top £1bn In Midst of Ladbrokes Coral Deal

After starting off in 2004 as Gaming VC Holdings, the firm has grown exponentially with Alexander at the helm. Through a series of massive acquisitions, including Sportingbet and Betboo, the company has sustained excellent organic growth and transformed into one of the largest iGaming operators on the internet.

In a recent update, which comes while the company prepares for the Ladbrokes Coral takeover, the company’s largest Net Gaming Revenue since its £1.1 billion takeover of bwin.party digital entertainment in 2015 was revealed. In a separate statement pertaining to revenue released on GVC’s site, Alexander said:

“I'm delighted to report another strong year for the Group with underlying NGR growth of 18%, reflecting the strength of our brands, technology and the hard work of our talented people. We have once again demonstrated our ability to integrate significant acquisitions, realise material synergies and at the same time deliver top line growth. The recommended transaction with Ladbrokes Coral Group presents an exciting opportunity for both sets of shareholders, creating a global gaming group with a portfolio of strong brands across all major regulated online markets, together with proprietary technology and proven management.”

Although the merger is capturing a ton of media attention across the globe, as it should when two powerhouses in any industry merge like this (see Paddy Power-Betfair), the deal for these two major players shouldn't affect the millions of players split between their massive collection of some of the top betting and casino sites in the world.

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