Ladbrokes / Gala Coral Merger Approved but Shops Must be Sacrificed

Posted on: July 27, 2016, 06:30h. 

Last updated on: July 27, 2016, 07:04h.

Ladbrokes and Gala Coral Must Lose 400 Shops Before Merger
Ladbrokes and Gala Coral must close up to 400 shops across the UK if their proposed £2.3 billion merger is to go ahead, says competition regulator. (Image: dailyrecord.co.uk)

The merger of Ladbrokes and Gala Coral can go ahead but the combined company must agree to sell 350 to 400 of its bookmaking shops in the interests of fair competition.

That’s the word from the Competition Markets Authority (CMA), the regulatory body that oversees the promotion of competition for the benefit of consumers and the health of markets in the UK and elsewhere.

Ladbrokes and Gala Coral, which agreed to a £2.3 billion merger last July, are the second and third biggest bookmakers in the UK, respectively.

Their combination, however, would give them 4,000 high street betting shops across the country, dwarfing the incumbent market leader, William Hill, which has around 2,400 shops.

Consumer Protection

The antitrust regulator’s inquiry chairman, Martin Cave, said this week that CMA had identified 642 areas where the merger would damage competition.

“We’ve found that the merger between two of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas,” he said.

“Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a significant proportion of customers still choose to bet in shops, and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers.”

Ready to Comply

The two companies are understood to be willing to comply with the CMA’s demands and may even feel they got off lightly; some analysts were predicting that up to 1,000 shops could be ordered to close.

“Gala Coral Group welcomes the announcement by the CMA that the merger of the Coral Group with Ladbrokes plc can proceed subject to the sale of between 350 and 400 shops,” said the bookmaker in an official statement.

“Discussions with potential buyers can now accelerate, and we remain on track to complete the merger in the autumn.”

The UK bookmaking industry has been experiencing an unprecedented level of consolidation over the past two years, a reaction to increased taxation and regulation at home and abroad. The announcement of the merger swiftly followed that of Paddypower and Betfair, which now operates as a combined group.

Meanwhile, it became known this week that 888 and the Rank Group were preparing a reverse takeover of William Hill that would value the company at £3 billion ($4 billion). 888, itself, survived an attempted takeover by William Hill only last year.