Global gaming group GVC Holdings has offered to buy UK-based Ladbrokes Coral, offering $5.2bn for the bookmaking group.
GVC has valued the firm at 160.9p a share, with additional loan notes including at a an extra 42.8p per share. Any deal would lead to GVC owning 53.5% of the combined group, with Ladbrokes Coral shareholders owning 46.5%.
GVC Chief Executive Kenneth Alexander is expected to head up the combined group, although this has yet to be finalised and may change over the coming weeks.
As a result of the takeover speculation, shares in Ladbrokes rose by 26% in early trading on Thursday, with shares in GVC Holdings rising by 6% as a result of the talks.
In a joint statement, Ladbrokes Coral and GVC Holdings said: “The enlarged group would be an online-led, globally positioned betting and gaming business that would benefit from a multibrand, multichannel strategy applied across some of the strongest brands in the sector.
“The enlarged group would be geographically diversified with a large portfolio of businesses across both regulated and developing markets, with the scale and resources to address the dynamics of a rapidly changing global industry.”
According to the statement, the purchase price would depend on the outcome of the highly-anticipated triennial review into the UK gambling industry, in which the government is expected to call for a significant reduction in the maximum stake playable in fixed odds betting terminals. The reduction is expected to badly hit the income from Ladbrokes Coral’s 3,500 betting shops, potentially reducing the firm’s net value.
GVC, which operates brands including Sportingbet, Foxy Bingo, PartyPoker and Bwin recently announced group revenues of £243.5m during the third quarter of 2017, a rise of 10% year-over-year.
Ladbrokes Coral added: “Any transaction would also enhance the enlarged group's position in a number of the world's largest regulated online gaming markets, including the UK, Italy and Australia, and would significantly increase GVC's current share of revenues from locally regulated/taxed markets to more than 90 per cent.”