Merger yet to be approved
British bookmaker Gala Coral has sold off its bingo clubs in anticipation of a planned merger with former rival Ladbrokes. The £2.3billion (US$3.4 billion) merger, subject to approval from the Competition & Markets Authority, would create the largest bookmaker in the U.K., larger even than William Hill, with almost 4,000 betting shops. The merger would require the new firm to divest some assets to avoid monopolistic concerns.
“The disposal is another transformative step for Gala Coral, following the turnaround of the business over the past few years,” said Gala Coral CEO Carl Leaver. “Gala Coral remains focused on growing and developing our retail bookmaking and online businesses, and concluding the proposed merger with Ladbrokes.”
In a recent feature, the U.K. Telegraph called the merger “the biggest gamble yet” for Ladbrokes CEO Jim Mullen. Approved by more than 90 percent of Ladbrokes shareholders in November, the merger is “a great deal” for the company, Leaver said at the time. He noted that Coral posted a 6.4 percent increase in annual net revenues to £1 billion (US$1.5 billion) in 2015.
But Irish billionaire Dermot Desmond, 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.”
Mullen concedes that Ladbrokes has made mistakes, among them, not keeping pace with bet-in-play products for football. Former CEO Richard Glynn concentrated on building an in-house digital technology rather than engaging a third-party expert like Playtech. The “brave decision … didn’t work out, and put us back three years,” Mullen told the Telegraph. Ladbrokes went on to partner with Playtech in 2013.
The sale of bingo clubs was first announced in October, reports the East Anglian Times, which adds that the merged firm will retain the Gala brand and the websites Galabingo.com and Galacasino.com.
Some industry observers say the new company may have to sell off as many as 1,000 betting shops in total to meet CMA requirements.