Ladbrokes Coral approves takeover by GVC Holdings of up to £4bn

Britain's largest bookmaker Ladbrokes Coral has agreed to be taken over by smaller online-focused rival GVC Holdings for a sum of £3.2bn that could rise up to £4bn, creating one of the world's largest listed betting companies.

GVC said it sees at least £100m of efficiencies from the deal that should lead to a double-digit boost to earnings.

Ladbrokes chairman John Kelly and the board of Ladbrokes Coral unanimously recommended GVC's offer.

Kelly said that in the relatively short time since Ladbrokes and Coral "has demonstrated why scale can be so effective in this market" and said a combination with GVC would "drive faster online growth and build a more diverse and extensive international portfolio of businesses".

GVC chief executive Kenneth Alexander highlighted the combination of "a portfolio of established brands, proven technology and leading market positions in multiple geographies" and that the enlarged group would have "the scale, diversity, proprietary technology and management expertise to pursue many opportunities globally".

DETAILS OF THE DEAL

If accepted, Ladbrokes Coral shareholders will receive 32.7p in cash per share, 0.141 ordinary GVC shares and a contingent entitlement of up to a further 42.8p depending on the outcome of the government's regulatory Triennial Review into fixed odds betting machines.

Following completion, Ladbrokes Coral shareholders will hold roughly 46.5% of the enlarged group with GVC's owning about 53.5%.

Based on GVC's closing price of 934p, the offer values Ladbrokes Coral on a fully diluted basis at roughly £3.2bn and represents a potential value of up to 164.4p per Ladbrokes Coral share. Ladbrokes closed at 174.09p overnight.

GVC's further offer of up to 42.8p structured as a 'contingent value right' determined by the outcome of the government's triennial review, values each LCL share at 207.2p and would take the valuation up to £4.0bn.

The CVR is calculated on a sliding scale based on what maximum stakes are imposed under the government's batting machine review, with a maximum stake of £0 giving 0p, a stake of £20 resulting in a CVR worth 30.3p per share and £50 worth 42.8p.