Citywire for Financial Professionals
Stay connected:

View the article online at http://citywire.co.uk/money/article/a1075726

Ladbrokes Coral surges on GVC takeover bid

Shares in gambling group surge after takeover bid from rival GVC ahead of government clampdown on the sector.

 
Ladbrokes Coral surges on GVC takeover bid
 

Shares in Ladbrokes Coral (LCL) have raced to the top of the FTSE 250 after rival gambling business GVC (GVC) launched a takeover bid.

The stock jumped 24% to 168.3p, while shares in GVC were up 4.8% at 952.5p on the news.

GVC has offered to pay up to £3.9 billion, or 203.7p per share, for the business. Under the deal, GVC shareholders would own 53.5% of the combined group, and Ladbrokes Coral shareholders 46.5%.

The deal would be the latest in a flurry of takeovers in the gambling sector. Last year GVC bought Btwin.party, while Ladbrokes and Coral merged.

The move comes as gambling groups face tougher regulation, with the government set to crack down on fixed odds betting terminals (FOBTs). Current rules limit maximum stakes on these machines to £100, but this could be slashed to as low as £2.

While a GVC takeover of Ladbrokes Coral has long been rumoured, the timing of the deal, before the new rules on FOBTs are announced, took some by surprise.

However, GVC has hedged against punitive rules, with the price it will pay for the business falling to £3.1 billion, or 160.9p per share, should the limit be slased to £2.

'GVC coming in before knowing the outcome of the all-important government review into the industry was probably an outside bet,' said George Salmon, equity analyst at Hargreaves Lansdown, pointing to the 'significant chunk' of Ladbrokes Coral revenues from FOBTs.

But he said that GVC's pricing hedge 'makes sense', as did the strategic rationale for the deal.

'GVC should get plenty of cost savings, while the combination would bump up its exposure to some of the world's largest regulated online gaming markets, including the UK, Italy and Australia.'

Shares in Playtech (PTEC), the gambling software provider with a tie-up to Labrokes Coral, slumped 6.1% to 794.5p on the news.

'At this stage we are uncertain over the potential impact on one of its most important licensees although note its stake in Ladbrokes Coral is worth approaching 80p per share,' said Greg Johnson, analyst at Shore Capital.

The FTSE 100 meanwhile rose 17 points, or 0.2%, to 7,365. Among 'small-cap' stocks, HSS Hire (HSS) surged 13.3% to 33p after announcing additional cost savings.

leave a comment

Please sign in here or register here to comment. It is free to register and only takes a minute or two.

News sponsored by:

The Citywire Guide to Investment Trusts


In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.

Watch Now

More about this:

Look up the shares

  • Ladbrokes Coral Group PLC (LCL.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • GVC Holdings PLC (GVC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • Playtech PLC (PTEC.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them
  • HSS Hire Group PLC (HSS.L)
    Register or Sign in to receive email alerts for items in your favourites whenever we write about them

Archive

Today's articles

Tools from Citywire Money

From the Forums

+ Start a new discussion

Weekly email from The Lolly

Get simple, easy ways to make more from your money. Just enter your email address below

An error occured while subscribing your email. Please try again later.

Thank you for registering for your weekly newsletter from The Lolly.

Keep an eye out for us in your inbox, and please add noreply@emails.citywire.co.uk to your safe senders list so we don't get junked.

Read more...

Shell and BP boost FTSE as oil jumps on UK outage

by Daniel Grote on Dec 12, 2017 at 12:05

Sorry, this link is not
quite ready yet