GVC Holdings and Ladbrokes Coral in Potential Merger

One year after GVC Holdings failed in its bid to acquire UK bookmaker Ladbrokes Coral, the Isle of Man based operator is resuming its efforts once more, this time in a takeover bid worth around £3.9 billion ($5.24bn).
While Ladbrokes Coral was established back in 1886, making it Britain’s oldest bookie, Foxy Bingo owner GVC Holdings is an online upstart with a history dating back to 2004. GVC is now looking to pay 160.9p per Ladbrokes Coral share, given the new company a valuation of £3.1 billion. If successful in its endeavor, GVC will subsequently hold a 53.5% share of the new group formed by the merger.
Nevertheless, the deal is apparently hinging upon the outcome of a Government review into fixed-odds betting terminals (FOBTs) placed in high street bookies across the country. These gambling machines have attracted a lot of bad publicity in recent times, and have been labelled the crack-cocaine of gambling due to their highly addictive nature.
As a result, the Department of Culture, Media and Sport is considering reducing the maximum stakes allowable on FOBTs from £100 ($132) per spin to somewhere in the £2-£50 ($3-$67) region. GVC said it would then pay £3.9 billion for Ladbrokes Coral if the cap is at the higher end of the scale, but just £3.1 billion if a £2 cap is imposed.
The gambling giant formed from the companies’ merger would subsequently result in a behemoth worth £6.8 billion, making it significantly larger than nearest rivals such as William Hill, Bet365 and Paddy Power Betfair.
Commenting upon the potential deal, Ladbrokes Coral chief executive Jim Mullen, who was at the helm when Ladbrokes and Coral agreed their £2.3 billion merger last year, stated that the deal would be of great benefit for both groups of shareholders. Similarly, Ireland’s biggest stockbroker, Stockbroker Davy, said that a merger would create “an online and retail gaming company of enormous scale and should lead to material synergies.”