Timing may be curious but gambling merger looks sound

Comment Martin Flanagan

GVC coming knocking on the takeover door again for Ladbrokes Coral was always a short-odds bet. GVC has form in gambling industry consolidation. But you would never have bet the farm on the suitor making its renewed move before the outcome is known of the pivotal government inquiry into fixed-odds betting terminals (FOTBS).

The terminals make up a fair slug of Ladbrokes Coral’s high street earning, and there are strong suggestions that the government will slash the maximum stake punters can make on the machines from £100 to anything between £2 and £50.

That means the financial arithmetic underpinning GVC’S approach could be significantly shaken if the industry’s worst fears come to pass.

GVC’S addresses this imponderable by saying it will ramp up the terms of its outline approach to Ladbrokes Coral if the FOTB review is favourable to the betting sector, in effect taking the amount it is willing to shell out to £3.9 billion from £3.1bn. It still seems unnecessarily convoluted, however, when GVC could have just kept its powder dry until the review was completed.

But, timing issues aside, the rationale for a combination looks sound. Ladbrokes Coral has the eponymous Ladbrokes and Coral high street presence, alongside brands such as Gala Casino and Gala Bingo.

GVC – with brands such as Bwin, Sportingbet, Partypoker, Partycasino and Foxy Bingo – has little debt and a fastgrowing worldwide online footprint.

There should be plenty of cost savings, from shared IT and procurement efficiencies to middle management and back office de-duplication, and the tie-up should increase GVC’S exposure to some of the world’s biggest regulated online gaming markets, including the UK, Italy and Australia.

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