GVC Bid to Acquire Ladbrokes Coral for $4.6 Billion Falls Through

Posted on: August 22, 2017, 04:00h. 

Last updated on: August 22, 2017, 04:37h.

GVC Holdings was reportedly ready to offer 3.6 billion pounds ($4.62 billion) to acquire rival British gambling company and bookmaker Ladbrokes Coral, but the two sides couldn’t agree on a selling price.

GVC Holdings Ladbrokes Coral
GVC CEO Kenneth Alexander once again put plenty of chips on the table to acquire Ladbrokes Coral, but no deal was struck for a second time. (Image: David Rose/The Telegraph)

The recent takeover talks were reported by the Financial Times, and marks the second such time GVC has attempted to unite forces with Ladbrokes Coral. According to the UK-focused business media outlet, GVC was prepared to offer 2.7 billion pounds ($3.46 billion), or about 140 pence per share, and would increase that price to $4.62 billion should an ongoing governmental regulatory review result in a favorable ruling for gambling shops.

Traded on the London Stock Exchange, Ladbrokes Coral is currently selling for about 120 pence. Despite the premium offer, the two companies reportedly couldn’t agree on their respective valuations and abandoned the deal.

Regardless, it shows that further consolidation in the UK’s gambling industry is likely forthcoming. Parliament continues mulling new restrictions on fixed-odds betting terminals (FOBTs) at betting shops throughout the UK.

Unstable Regulatory Environment

The biggest obstacle in reaching a deal between GVC and Ladbrokes is the ongoing regulative uncertainties. Ladbrokes has about 3,500 betting shops in the United Kingdom.

Government officials have called FOBTs the “crack cocaine of gambling,” and are considering slashing maximum bets from £100 ($128.25) to just £2 ($2.56). Should that happen, financial analysts believe Ladbrokes Coral’s revenue would plummet.

GVC, which is headquartered in Isle of Man, is the parent company to a more diversified portfolio. In 2015, GVC acquired the larger bwin.party in a reverse takeover for $1.7 billion. The online gambling and poker provider gave GVC a presence in various European markets, as well as in the United States. 

GVC also owns Sportingbet and provides online gaming services through its business-to-business operations. The parent organization is licensed in 14 countries and takes in close to $5 billion in sports bets annually.

Ladbrokes Coral is largely reliant on its land-based betting shops. Potential upcoming changes to regulatory conditions makes establishing the corporation’s value difficult, if not impossible.

Third Time’s the Charm

GVC has struck out in acquiring Ladbrokes for a second time, but it likely isn’t the group’s final attempt.

Mergers and acquisitions has been the name of the game in the UK gambling industry in recent years. In 2015, Paddy Power and Betfair joined forces to create one of the biggest online sports betting companies in the world. A year later, Ladbrokes and Coral completed its merger.

William Hill has been the target of multiple takeover attempts. 888 Holdings and the Rank Group both made offers, and both were strongly rebuffed by William Hill Chairman Gareth Davis.

Further consolidation seems to be a good bet, however, and once parliament ends its gambling review, perhaps an easier negotiating table will be found. GVC has been the most aggressive corporation in trying to buy competing companies.

In July, GVC CEO Kenneth Alexander told investors that the company is “well positioned to pursue further acquisition opportunities should they arise.”