UK-based gaming giants Ladbrokes and Gala Coral Group are discussing a possible merger, according to a report on RacingPost.com. The combined company would become the largest in the UK’s gambling industry.
Ladbrokes CEO Jim Mullen confirmed the talks with the Racing Post, saying:
Since becoming CEO my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes. My plans are well advanced and I look forward to presenting them to shareholders.
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.
The board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms.
Ladbrokes currently operates 2,194 betting shops around the United Kingdom (for all you in the United States, yes, that’s really a thing: betting shops!), while Gala Coral owns 1,845. William Hill is the leader at the present with 2,300. Gala also has 870 betting shops under the Eurobet brand in Italy.
Shares in Ladbrokes rose sharply on the news, closing at 140p on Tuesday after a close of 122.10 on Monday, a 14.7 percent increase. Shares had gotten as high as 147p during the day Tuesday. Gala Coral is privately held by a number of private equity firms, but if the merger were to happen, the new, combined would aim to be listed on the London Stock Exchange.
The two companies were almost married back in 1998 when Ladbrokes attempted to acquire Gala Coral for £363 million from Bass Brewery, but the deal was scuttled by Peter Mandelson, Britain’s Secretary of State for Trade and Industry. Ladbrokes had actually bought Coral in December 1997, but the deal was referred to the UK Monopolies and Mergers Commission. Mandelson reversed the acquisition, saying the combined company would “would damage competition and disadvantage punters,” as there would at the time have only been one other competitor, William Hill, in the UK market. Ladbrokes was allowed to keep Coral’s betting offices in the Channel Islands.
Things may be different this time around if the two parties agree to a deal. 2015 is a long way removed from 1998 and now online sports betting is prolific with widespread competition. The combined William Hill / Gala company would certainly dominate the brick-and-mortar betting shops, but gamblers would still have plenty of options on the internet.
Both though their primary business is sports betting, William Hill and Gala do both have online poker sites, both on the iPoker Network. The iPoker Network is currently in the fourth spot on PokerScout.com’s cash game traffic rankings with a seven-day average of 1,450 cash game players.
