The expected merger of Labrokes and Gala Coral has been confirmed today following acceptance by both parties of a deal which will see the creation of Ladbrokes Coral plc.
It will be a £2.3bn new entity and a more effective competitor in the gambling market. Ladbrokes’ online and land-based business will be combined with parts of Gala Coral, notably Coral Retail, Eurobet Retail and Gala Coral’s online division. Ladbroke Coral expects to raise annual net revenues of over £2bn and an EBITDA of £392m for the second year following the merger year.
In all, the new company will have 4,000 bookmaker’s shops, twice that of its competitor William Hill. It is expected that some of the holding will have to be sold where synergies demand and in order to satisfy the monopolies authorities. The brands will remain, permitting cross-brand marketing and the newly-combined business will generate 20 per cent of its revenue from internet gambling.
A joint statement said that the two companies would combine their digital R&D teams to strengthen their products. Gala Coral’s Italian company, Eurobet Italia, will fit with Ladbroke’s online and retail business in Belgium, Spain and Australia. It is expected that global operations will make up over 10 per cent of the merged businesses' revenues.
Ladbroke’s CEO Jim Mullen will become CEO of the new plc. Gala Coral CEO Carl Leaver will be executive deputy chairman for the first year. Paul Bowtell, CFO at Gala Coral, will take the same role with the new company and John Kelly, senior independent non-executive director at Ladbrokes, will become non-executive chairman.
COO at Ladbrokes Coral will be Andy Hornby, currently COO at Gala Coral. The new board will have one additional non-executive director from the current Ladbrokes board. Rob Templeman, at present Gala Coral chairman, will be a non-executive director of the new organisation. Three more independent non-executive directors will be introduced further down the line.
The outgoing Chairman of Ladbrokes, Peter Erskine, said: “Ladbrokes and Coral are two highly complementary businesses, with rich heritage and brand presence across the UK and internationally. Together we will create a leading betting and gaming business combining strong brands with an attractive multi-channel offering and 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.”
The deal provides for Gala Coral shareholders to receive new ordinary shares giving them a 48.25 per cent stake of the enlarged share capital of Ladbrokes Coral. Ladbrokes shareholders will have 51.75 per cent. The Coral Group, with Gala Coral’s online business, will arrive with net debt of £865m, which will mean that the new combined group will have a net debt of £1.3bn.
Playtech technology is used by both companies and Playtech has agreed to change its marketing services agreement with Ladbrokes to help the merged company’s integration. Labrokes and Gala Coral have agreed to speed up the determination of amounts due to Playtech under the agreement with a £75m payment, £40m of which will come in new shares and the rest in cash over a period of time.
