Ladbrokes and Coral face sell-off to seal merger
CMA says tie-up could harm local competition and suggests betting giants offload up to 400 shops
LADBROKES and Coral could be forced to sell a tenth of their high street estate before their £2.3bn merger can go ahead, antitrust regulators have said.
In a provisional ruling, the Competition and Markets Authority (CMA) found that the merger, which would create the UK’s biggest bookmaker, could harm competition in 659 local markets and result in a poorer offering for consumers.
The betting giants could be required to offload 350 to 400 shops from their combined network of 4,000 high street locations before the deal can go ahead.
Ladbrokes’ shares jumped as much as 16pc before ending up 6.5pc at 127.3p as analysts said the number of stores the bookmakers would have to sell was lower than feared.
The CMA identified hundreds of areas where Ladbrokes and Coral have betting shops within 400 yards of each other, which tends to be the boundary within which most competitive interaction between bookmakers takes place.
“We’ve provisionally found that the merger between two of the largest bookmakers in the country may be expected to reduce competition and choice for customers in a large number of local areas,” said Martin Cave, the chairman of the CMA inquiry.
“Although online betting has grown substantially, the evidence confirms that a large number of customers choose to bet in shops – and many would continue to do so after the merger. For these customers, competition comes from the choice of shops and it’s they who could lose out from any reduction of competition and choice.
“We’re also concerned that such a widespread potential reduction in competition at the local level could worsen those elements that are set nationally such as odds and betting limits.”
Along with William Hill and Betfred, the four largest national bookmakers control about 87pc of the market.
Analysts at Goodbody called the CMA’s provisional judgment “a significant positive for Ladbrokes”, noting that the number of stores they would need to shed falls at the lower end of the expected 400 to 1,000 range.
Credit Suisse said the report was “a step in the right direction” for the bookmakers. The bank had previously forecast that the sale of 600 shops would knock £34m off earnings.
A spokesman for Gala Coral said it “noted” the ruling from the CMA and would continue to work with the regulator “in order to agree these remedies”.
The betting company, which is currently owned by private equity firms Candover Investments, Cinven and Permira, is understood to be in talks already with prospective buyers.