UK betting operators Ladbrokes and Gala Coral Group have announced plans to sell 359 betting shops to rivals Betfred and Stan James in a deal that will allow the pending Ladbrokes-Coral merger to conclude this month.
Over the weekend, Ladbrokes and Gala Coral Group issued joint statements detailing their plans to sell 322 betting shops to Betfred and a further 37 shops to Stan James.
Lads-Coral expect to realize a total of £55.5m from the sale, which the companies plan to use to repay debt. Lads is giving up 185 shops for total consideration of £29m, while Coral is shedding 174 shops for £26.5m. Betfred is paying £55m for its 322 shops, while Stan James is paying only £500k for its 37 shops.
The sale is expected to be “slightly dilutive” to Lads, Coral and the enlarged group’s earnings. The shops in question generated earnings of £16.8m in 2015, making the sale an earnings multiple of 3.3x.
The sale of 350-400 shops was required by the UK Competition and Markets Authority as a condition for approving the Lads-Coral merger. The sale is conditional on the Lads-Coral merger actually concluding as well as getting the CMA to approve the sale terms. The shops will be transferred to their new owners “on a phased basis,” while Lads and Coral would then seek the CMA’s consent to complete the merger “subject to the divestiture of one remaining shop.”
Ladbrokes CEO Jim Mullen said the sale “will clear the last significant hurdle to delivering on the merger with Coral.” Gala Coral CEO Carl Leaver said he hoped the merger would be complete “before the end of October.”
Leaver added that “other potential purchasers were prepared to pay a significantly higher price” for the shops in question, but claimed that Betfred and Stan James “delivered greater certainty which was critical to paving the way for the completion” of the merger.
The rebranding of Stan James’ new shops will be interesting, as the Stan James retail brand is itself living on borrowed time. Nordic online betting operator Unibet acquired Stan James Online in a July 2015 deal that included the Stan James brand. In January, Stan James co-founder Steve Fisher said the firm’s 80-odd shops were facing a January 2017 deadline to finish its “seven-figure” rebrand.
