Watchdog's light touch lets Coral and Ladbrokes gallop to merger

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Ladbrokes and Coral came under starter’s orders to forge the UK’s biggest chain of bookies today after the competition watchdog said they needed to sell fewer shops than expected to consummate their £2.2 billion marriage.

The Competition & Markets Authority said it wanted to see the sale of “around 350 to 400 shops” in specific local areas where the two overlap. Ladbrokes shares leapt more than 10%, up 12.3p to 131.8p.

Analysts had suggested anything from 400 to 800 shops might have to be sold to get the deal past the CMA. It was widely thought that a number approaching 1000 would make the deal unviable. 

As it is, Ladbrokes/Coral will end up with just over 3500 shops — easily leapfrogging William Hill with 2370 outlets — to be the biggest bookmaker in the country. 

Martin Cave, chairman of the inquiry, said: “Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a large number of customers still choose to bet in shops — and many would continue to do so after the merger.”

The CMA said bookies used discounts and free bet offers locally to try to win customers from each other — and that could disappear where Ladbrokes and Coral dominated a High Street.

“This is a significant step forward,” said a Ladbrokes spokesman. “Our focus now is to move forward on the remedies proposed by ther CMA.”

Ladbrokes and Coral have both received a number of early enquiries from potential buyers of shops with BetFred widely named in the frame.

Since the CMA has identified 659 local areas where it said the deal could “result in substantial loss of competition”, the sale of slightly more than half the shops in those localities will have to be individually approved by it.

Cave (pictured) said: “We’ll need to look closely at the number of shops and areas that would be involved — the overall size and complexity may mean the sales need to be substantially completed before the merger can go ahead.”

For Ladbrokes and Coral, a single buyer would be a distinct advantage and could mean a higher price for the shops. But they will have to offer a mix of their less successful and more profitable shops to satisfy the CMA they are not simply offloading their worst outlets.

Ladbrokes and Coral announced their all-share merger last July. A previous plan to merge was blocked by regulators in 1998.

Source Article from http://www.standard.co.uk/business/watchdog-s-light-touch-lets-coral-and-ladbrokes-gallop-to-merger-a3253256.html

May 21, 2016 |
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