Ladbrokes Coral reviewing ‘all options’ ahead of October industry judgement

Ladbrokes Coral Plc is reported to be reviewing all corporate options, as it prepares for this October’s much anticipated UK government triennial review of industry FOBTs wagering and advertising standards.

This Weekend, The Sunday Times reported that Ladbrokes Coral governance has hired Deutsche Bank, Greenhill, and UBS as corporate advisors on ‘consolidation matters in preparation for the government’s decision.

Industry executives are concerned that Whitehall will implement a lowering in FOBTs wagering, reducing the current max-bet wager of £100 every 20 seconds. However, severe restrictions on machine wagering levels could wipe-out a + £400 million revenue stream for Ladbrokes Coral.

Under this turbulent context, the Ladbrokes Coral board is assessing its future options and strategy.

Officially merged in November 2016, Ladbrokes & Coral has so far delivered on its corporate expectations, with the enlarged enterprise delivering operating profits of £51 million for its first set of interim results whilst upping its merger cost savings target to £150 million.

Nevertheless, the firm’s share price performance has not reflected Ladbrokes Coral’s positive momentum, as FTSE investors remain tepid on UK gambling’s long-term prospects ahead of the critical triennial review.

Industry analysts now expect an M&A hungry GVC Holdings to undertake its third bid at a takeover of Ladbrokes Coral.

Last August, Ladbrokes Coral rejected a reported £3.6 billion takeover approach from GVC governance, which tempted shareholders to ‘create the outright UK gambling leader’ for online and retail betting.

GVC Holdings has retained investment banks’ Investec and Houlihan Lokey as finance and M&A advisors. The FTSE-listed online gambling group may well be aided in its pursuit of Ladbrokes Coral, should the UK government move to drastically lower FOBTs wagering levels, placing Ladbrokes Coral’s +4000 betting shop retail portfolio under severe strain.

Whatever the outcome of October’s review, all industry stakeholders believe that industry listed enterprises will likely have to undertake sweeping reforms to cope with new regulatory demands.

Following a volatile year for betting stocks, many sector commentators now believe that there will be no ‘calm period’ for the global betting industry which has witnessed mass industry consolidation from 2015-2017.

A punitive review may just be the trigger for another round of aggressive M&A activity for a much-changed betting sector… The UK government currently holds the starter pistol.


Source: SBC News