Embattled bookmaker looks to possible ‘reverse takeover’ after attempting to buy Gala Coral in 1998
High-street bookmakers Ladbrokes and Gala Coral Group are in talks over a merger that could see the combined business close the gap on market-leader William Hill, the parties have announced.
The two firms have history as Ladbrokes attempted to buy Gala Coral Group in 1998, only for the government at the time to block the move. Since then Ladbrokes has seen its market share fall as it has been slow to adapt to the online gambling model.
At the start of 2015 the business announced plans to close up to 60 branches as the pre-tax profit for 2014 fell to £38 million – down from £68 million one year previously. If the proposed merger with Gala Coral does go ahead it is not believed the planned closures will be affected or reversed.
Ladbrokes chief executive Jim Mullen, who was promoted to the top spot in March of this year, talked up the deal in a written statement released today.
“A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders,” he said.
Shares in Ladbrokes have jumped by 10p to 134p since the announcement. But Mullen warned that, although he is keen on the deal, “the board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms”.
Gala Coral is expected to undergo its own IPO later this year and has sold off several of its bingo halls in a streamlining exercise in preparation. The company is valued at around £250 million.
Chief executive Carl Leaver has said previously: “We remain pleased with the turnaround in the performance of Gala Retail and have recently embarked on a process to explore a potential sale of the division.”
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