GVC Gets Shareholder Approval for Takeover of Ladbrokes Coral
Posted on: March 10, 2018, 05:00h.
Last updated on: March 10, 2018, 07:27h.
GVC Holdings received nearly unanimous approval from its shareholders to proceed with a planned takeover of bookmaker Ladbrokes Coral, a transaction that will create one of the world’s largest gaming entities.
GVC first announced its intention to add Ladbrokes Coral to the group in December. The deal is just the latest sign that the global gaming industry is consolidating, with major mergers and acquisitions between gambling companies unlikely to stop anytime soon.
FOBT Decision Will Determine Final Cost
This deal, which will see GVC control 53.5 percent of the combined company, could value Ladbrokes Coral at as much as £4 billion. However, the final price won’t be determined until the United Kingdom makes a determination of what it wants to do with the maximum bet on fixed-odds betting terminals (FOBTs).
The government has already completed a review of the machines, and some reduction in the maximum stakes, currently set at £100, seems certain. However, a wide range of options are being considered, with limits as high as £50 or as low as £2 still possible.
The valuation of Ladbrokes Coral will vary depending on exactly where that limit is set. While GVC will pay £3.2 billion now, that only represents the minimum price they will pay in case of a £2 FOBT limit. A sliding scale could increase that amount up to £4 billion in the case of a £50 maximum bet.
The FOBT decision could also determine just how many jobs are lost in the consolidation of these two firms. GVC has made it clear that the merger could cause the elimination of up to 1,600 jobs at Ladbrokes, which currently employees 26,800 people. GVC CEO Kenny Alexander told The Telegraph that slashing FOBT limits would certainly have an impact, particularly if the maximum bet went all the way down to £2.
“Shops would close and it would mean people being made redundant,” Alexander said.
Consolidation Rampant in Gaming Industry
The takeover of Ladbrokes Carol is the third major move in five years for GVC, turning what was once a relatively small company into a global gaming power.
It started in 2013, when the company purchased Sportingbet. That was followed by a £1.1 billion merger with bwin.party in 2015 that has fueled GVC’s growth over the past three years.
That’s only part of an industry-wide story. Even Ladbrokes Coral itself was the result of a November 2016 buyout in which Ladbrokes purchased Gala Coral for approximately $2.8 billion. That year also saw Paddy Power and Betfair merge in a transaction valued at $7.6 billion.
For GVC, this latest move will help the company continue its move from grey markets to fully regulated jurisdictions. It also provides a brick-and-mortar presence for a firm that was previously known for online brands including partypoker, bwin, Sportingbet, and Foxy Bingo.
GVC has also been making smaller moves to complement its growth strategy. Earlier this month, the company announced that it had purchased a 51 percent stake in Georgian online gambling firm Crystalbet, with plans to purchase the remaining shares in the company in 2021.