Ladbrokes has agreed to buy Coral Group in a £2.3b share-exchange deal, creating the biggest bookie in Britain in terms of the number of betting shops.
The combined business, which will be listed on the stock exchange as Ladbrokes Coral Plc., creates a company with £2.1b annual net revenue.
Ladbrokes said that it’s placing 93m shares representing 10% its share capital to help fund the deal and slashing its dividend to 3p per share to shore up its finances.
Ladbrokes will have 51.75% of the enlarged company and will issue new shares to the private-equity owners of Gala Coral Group, including Anchorage Capital Partners and Apollo Global Management representing 48.25%.
“This is a major strategic step for Ladbrokes which firmly accelerates our strategy to improve the customers’ experience and build recreational scale. Ladbrokes and Coral are two highly complementary businesses, with rich heritage and brand presence across the UK and internationally,” said Ladbrokes Chairman Peter Erskine. “Together, we will create a leading betting and gaming business combining strong brands with an attractive multi-channel offering and an extensive national and international coverage. The transaction will provide an attractive opportunity to generate considerable value for both sets of shareholders, through significant operating synergies and a strong cash flow profile.”
“Today’s announcement is testimony to the track record and achievements of the Gala Coral team in delivering a significant transformation of the business over the past four years. This strategic combination is a natural fit and will offer further opportunities for growth. Coral Group’s online strength and high street presence will complement Ladbrokes’ established brand and footprint in the UK and internationally,” said Gala Coral Chairman Rob Templeman. “Together, the two businesses will have a strong digital presence with market leading technology, innovation and access to significant resources to drive continued growth and deliver enhanced returns for all shareholders.”
Ladbrokes CEO Jim Mullen will lead the combined company and Gala Chief Executive Carl Leaver becomes executive deputy chairman. Under the plan, both the Ladbrokes and Coral chains, a total of 4,000 shops, will be retained but some will probably have to be sold to meet Competition and Market Authority (CMA) requirements.