Betting shares, including Paddy Power-Betfair, rose sharply on the back of further industry consolidation talk, this time concerning a potential $5.2bn (€4.4bn) takeover of Ladbrokes-Coral by online operator GVC, which owns Bwin and Foxy Bingo, writes Geoff Percival.
GVC’s move comes at a pivotal moment for the British gambling industry, which is undergoing a government review.
The final price GVC pays will depend on the outcome of this review into fixed-odds betting terminals (FOBTs), which are big moneyspinners for companies like Ladbrokes but have come under fire for leaving gamblers with very heavy losses.
Following its so-called triennial review, the UK government said in October that the maximum stake allowed on FOBTs could be sharply cut over concerns they fuel addiction.
It started a 12-week consultation to consider cutting the stake to between £50 and £2, from £100 currently.
Last month reports emerged that both Paddy Power-Betfair and William Hill were in separate talks for a tie-up with Australian online betting firm CrownBet.
The Australian online betting company is seen as being a target for industry players with a UK presence seeking to expand their international operations in order to offset the toughening regulations in Britain.
A successful deal for Ladbrokes would also mark GVC’s entry into British retail gambling through its acquisition of approximately 3,500 betting shops, making it the biggest player on the UK high street and competing with William Hill and Paddy Power.
It would also inherit 141 Ladbrokes shops in Ireland.
Talks between GVC and Ladbrokes-Coral have been “on and off” for about a year, GVC boss Kenny Alexander said.
The two firms, whose previous unsuccessful deal discussions leaked in August, said in a joint statement they were in detailed talks over a takeover that would give Ladbrokes shareholders around 46.5% of the combined group.
Mr Alexander said the offer both “protects GVC shareholders” and “allows Ladbrokes-Coral shareholders to get value for whatever the business may look like” following the FOBT consultation.
Ladbrokes shares jumped by 29% on the news, while GVC’s share price was up 6%. Paddy Power-Betfair shares were up by nearly 1%, while those of William Hill rose by over 7%.
Davy said a GVC-Ladbrokes deal would make strategic sense.