A risky bet for Ladbrokes

THE idea of two of the oldest and most venerated names in British bookmaking – Ladbrokes and Coral – falling into the hands of neophyte Isle of Man online gaming group GVC, is both extraordinary and dispiriting.

It shows a lack of ambition by the Queen Mum’s favourite turf accountant, and is a journey into the unknown.

There has been just 13 months for the £2.3bn Ladbrokes Coral, bricks and mortar, racecourse and online betting merger to settle. Nevertheless, Ladbrokes chief executive Jim Mullen insists the technology integration has been wonderful.

Betting shop gaming is in flux because of advanced proposals to bring an end to crack-cocaine (fixed-odds) terminals.

As befitting a gaming giant, GVC has come up with a crafty device which promises Ladbrokes investors more cash should the Government fall off its moral high horse and leave the lucrative terminals untouched.

There is nothing original in the reasons Foxy Bingo-owner GVC gives for tempting Ladbrokes into a £3.9bn deal.

There would be geographical diversification, as 85pc of Ladbrokes is in the UK, and opportunities for sharing tech and slicing costs. But there are enormous risks too. GVC is a jumble of online betting sites assembled in just over a decade, including Sportingbet and Bwin.Party.

This is an outfit built on the entrails of former Real Madrid sponsor Bwin and the detritus of Partygaming. The latter had roots in pornography and was almost put out of business by the Americans.

The fatted genius behind GVC, Kenny Alexander, is destined for the top job at the combined group. We are reassured by Ladbrokes that its proprietary online betting technology is best-in-class.

Maybe, but in a fast- changing industry, where technology integration has been a challenge, there can be no confidence that GVC has the answers to halting slippage in Ladbrokes.com market shares. Nor does it have betting shop expertise, or the racecourse heritage of Ladbrokes.

The deal risks critical staff departures and raises questions about brands and domicile. UK regulators and tax authorities ought to look at the wisdom of allowing a betting colossus to be offshore in the Isle of Man. Moreover, it is not clear how other jurisdictions, including Trump’s America, will think about the combination. The share prices of both companies climbed.

But knee-jerk reactions fail to take note of tech, integration, regulatory and potential accounting risks.

Corrugated stuff

OF ALL the Smiths in the FTSE 100 (WH Smith falls outside), the least known is recycling and packaging group DS Smith.

Led by the understated Miles Roberts, the company, which turns recycled boxes and paper waste into corrugated packaging, is a big winner from ecommerce, as supplier of choice for traditional retailers as well as soaraway newcomers such as Asos.

The model DS Smith pioneered in Britain has been rolled out across the continent and has now reached the United States.

At a moment when David Attenborough and this newspaper have plastic packaging in their sights, the DS Smith model, with its 14-day turnaround from garbage to brightly coloured new packaging, offers answers.

Interim results show why. Revenues are up 19pc, pre-tax profits have hit £144m and DS Smith is moving into Eastern Europe, snapping up smaller rivals in Romania. The shares (which I hold) rose.

It needs to move freely and easily across European borders, and has concerns about Brexit and the impact on customs posts.

Roberts also needs to keep an eye on the US, where it is building new factories, given a long history of UK firms coming unstuck.

Hands off

JUST a week ago Whitbread was celebrating 275 years as a company in the presence of four former chairmen, including Sir Samuel Whitbread, at the Chiswell Street brewery in the City where it all began.

It may have shifted from beer to coffee but the hospitality and philanthropic culture is intact, even if the shares have slipped.

The arrival of Bill Ackman acolyte, activist investor Scott Ferguson, on the share register, ought to be greeted like a bag of cold sick. He was a key figure in the Herbalife fiasco in the US and among those punting the sale of British tech champion Worldpay to the Americans.

Whitbread chairman Richard Baker should be wary of engaging.