Carl Leaver, chief executive of British bookmaker Gala Coral, says the firm’s merger with Ladbrokes, approved by shareholders last month, will be beneficial for both parties, reports the UK Telegraph. His remarks have been seen as a response to criticism of the deal by Ladbrokes shareholder Dermot Desmond, who has vowed to fight the merger.
Leaver said Coral just posted a 6.4 percent increase in annual net revenues to £1 billion (US$1.5 billion). “I think these results will help to reaffirm that this is a great deal for Ladbrokes shareholders,” he said.
Desmond, an Irish billionaire who reportedly holds a 2.8 percent stake in Ladbrokes, said the only winners in this deal would be Coral’s owners, “who will receive access to liquidity for their shares and significant relief from a £2.2 billion (US$3.3 billion) debt burden.” Desmond, who sold the Betdaq betting exchange to Ladbrokes in 2013, also says the merger could require up to 1,000 betting shops to be sold or closed to meet antitrust concerns. That could mean as much as ?70 million pounds in lost earnings, he said.
The company to be called Ladbrokes Coral will have a total of about 4,000 shops; Leaver said he “wouldn’t necessarily disagree” that 400 to 500 of those shops would have to be divested.
Desmond also griped that the merged company will have a leverage of about three times net debt to earnings before EBITDA; even Leaver conceded that was “very much at the top end of what the market would accept.” But he added, “You can’t just look at the debt in isolation” and said “very strong cash flows” should lead to quick profitability.
According to the U.K. Guardian, Andy Hornby, former boss of the failed bank HBOS, will be the merged firm’s chief operating officer. He was in charge of the bank when it collapsed in 2008, and continues to be investigated for his role in that disaster. Leaver said the “merged company is lucky to have him.”
Meanwhile, Shay Segev, Coral’s chief strategy officer, has migrated to online gaming company GVC, which in September agreed to buy rival bwin.party for £1.1 billion (US$1.65 billion), the Telegraph reported. Segev, who held the role at Coral for less than five months, was previously employed at online gaming software provider Playtech.
