In a deal that has created one of the world’s largest betting companies, GVC Holdings last week announced it had agreed to purchase gambling group Ladbrokes Coral Plc for at least £3.2 billion. The official valuation is fluid because of a new regulatory scheme that is still being determined by the British government.
The Ladbrokes name will no longer be attached to a corporate structure for the first time since it was established in 1902, but will remain a brand under the GVC umbrella, joining a collection of other powerful gambling brands such as Bwin, Sportingbet, PartyPoker and Foxy Bingo.
The complicated deal took nearly a year to put together and was complicated by the pending new regulations as the government conducts a gambling review and ponders reducing the maximum bets and jackpots at the FOBT games currently being offered at all British betting shops. The maximum bet now stands at £100 but observers expect that to be cut to between £50 and £2. The final pricing of the purchase will remain unclear until that limit is set.
Just last year, Ladbrokes completed a £2.3 billion merger with the Coral Group, which consists of betting shops and bingo parlors across Great Britain. The merger gives GVC increased access to the UK market, in addition to its presence in Germany, Italy and Australia, as well as a possible role in the expansion of iGaming and sports betting in the U.S.
GVC Chairman Lee Feldman and CEO Kenny Alexander will remain in those roles in the new company, with Ladbroke’s financial director Paul Bowtell taking over as finance chief for GVC.
Prior to completion of the deal, GVC sold its Turkish assets for €150 million to avoid any complications since most forms of gambling are illegal in Turkey.
Over the past year shares in both GVC and Ladbrokes Coral have increased nearly 50 percent. On the announcement of the merger, Ladbrokes rose 1 percent and GVC decline by 3 percent.
At the same time, significant numbers of GVC shareholders voted against the companies’ remuneration and bonus policies for director and top execs, even as the company was seeking to acquire Ladbrokes Coral.
According to Britain’s Daily Telegraph, 27.5 percent of the company’s investors voted against a new directors’ remuneration policy, while 26.4 percent objected to the annual and deferred bonus plan.
According to the paper, in the 2016 financial year, CEO Alexander saw his pay rise by 430 percent to £19.5 million, although this was largely driven by the company’s share price rise.
Jane Anscombe, chair of GVC’s remuneration committee, told the Telegraph the company would “re-engage” with shareholders after the vote. She said many “disagreed with the remuneration committee’s view that the maximum incentive levels proposed were necessary to incentivize and retain the company’s high performing management team.”
