The GVC Ladbrokes Coral acquisition of one of the oldest and biggest bookmakers in Britain may be phenomenal news for the company buying it, but it could be a brutal blow for many employees of the company being bought out.
The Isle of Man-based GVC Holdings, as an ever-growing gaming giant which already owns bwin, partypoker, and Foxy Bingo, struck an agreement to acquire the Ladbrokes Coral Group in December for an expected price of about $5.5 billion. While the deal isn’t done yet, GVC and Ladbrokes are already conceding that if and when the ink is dry, nearly six percent of Ladbrokes’ 26,800 employees could lose their jobs.
It all adds up to the loss of more than 1,600 jobs at Ladbrokes, with most expected in areas that will be deemed redundant once the merger is complete, such as customer service, as well as administrative and marketing positions.
Closing Up Shop?
Ladbrokes’ chain of 3,500 high street betting shops won’t be affected by the deal. However, the same can’t be said for the company’s head office in London, which will likely be shuttered. Almost all of the potential job losses would come from the UK, including current Ladbrokes’ CEO Jim Mullen, who is expected to leave the company once the deal is finalized.
The remaining employees from the main office would be redistributed to GVC’s head office, also located in the British capital.
The final price of acquisition may well depend on the government’s ongoing review of fixed-odds betting terminals (FOBTs). Lawmakers are looking at whether maximum bets allowed at the controversial video terminals should be lowered from the current £100 ($134) limit.
Suggested figures for a new maximum bet range from £2-£50 ($2.68-$67), and since Ladbrokes operates the FOBTs in their shops, the ruling could have a significant impact on the final cost of the deal.
Antitrust Conflicts Possible
The merger would be the latest shakeup in the UK gaming industry, which has seen major changes in recent years. GVC bought bwin.party for $1.67 billion in 2015, and in 2016, Paddy Power and Betfair brokered a $7.6 billion dollar merger.
Given just how much of the betting market GVC stands to gain in this latest deal, it’s no surprise that it’s under investigation by regulators. The Competition and Markets Authority (CMA) intends to see if such a merger would lead to a “substantial lessening of competition” in the UK market.
A February 21st deadline has been set for collecting comments on the deal.
According to The Racing Post, Ladbrokes Coral Communications Director Donal McCabe believes the investigation is nothing more than due diligence.
“This is a process you have to go through on any deal and we’re not aware there would be any competition issues”, said McCabe.
While no hiccups are anticipated, the investigative process could continue for a while yet. Once complete, the deal would secure the new alliance as the biggest betting behemoth in Britain, giving it the largest share of that market in not only the UK, but also Italy and Germany.