move will take it past the current high street leader, William Hill, combining
Ladbrokes' 2,100 shops with Coral's 1,845.
Ladbrokes has announced the completion of its
proposed merger with rival operator Gala Coral, in a deal that will lead to the
creation of a business worth approximately £2.3 billion (3.2
Both businesses expect the newly branded
Ladbrokes Coral operation to boast net revenue of £2.1
billion as well as earnings before interest, tax, depreciation and amortisation
of £392 million, excluding cost synergies of at lest £65
Under the merger agreement, Ladbrokes will issue new ordinary
shares to the existing shareholders of Gala Coral representing 48.25% of the
new combined entity, while existing Ladbrokes shareholders will own 51.75% of
Jim Mullen, currently serving as chief executive of
Ladbrokes, will take on the same role within the new business.
Hornby, former chief executive of bailed out bank HBOS and current Gala Coral
chairman, will become chief operating officer of the merged entity and will be
responsible for its estate of betting shops and digital operations.
Gala Coral chief executive, Carl Leaver, will become executive deputy
chairman for a term of 12 months post completion and will lead delivery of
In addition, John Kelly, senior independent non-executive
director of Ladbrokes will take the role of non-executive chairman, while Gala
Coral chief financial officer, Paul Bowtell, will take the same role at the
This is a major strategic step for Ladbrokes
which firmly accelerates our strategy to improve the customers' experience and
build recreational scale, Ladbrokes chairman Peter Erskine said.
Together, we will create a leading betting and gaming business combining
strong brands with an attractive multi-channel offering and an extensive
national and international coverage.
Gala Coral chairman Rob
Templeman added: This strategic combination is a natural fit and will
offer further opportunities for growth. Together, the two businesses will
have a strong digital presence with market-leading technology, innovation and
access to significant resources to drive continued growth and deliver enhanced
returns for all shareholders.
News of the merger comes as
Ladbrokes announced a new three-year marketing-led plan to expand its customers
base and build scale.
The firm aims to grow its UK digital recreational
sports betting customer base, increase footfall across its UK retail business,
deliver multi-channel revenue growth from its UK retail and digital operations,
as well as accelerate the growth of its Australian division.
said: We will implement this programme responsibly with care for the
interests of our staff and customers but this programme is urgent, overdue and
essential if we are to build a more sustainable and valuable Ladbrokes. This
plan is not without its challenges or impacts, particularly upon dividends in
the short-term, however I am confident that this time, it is deliverable."
The plan will be rolled out on the back of Ladbrokes half-year
trading update, in which it revealed mixed results for the six-month period
through to June 30. Headline net revenue was down by 0.1% on a year-on-year
basis to £588.8 million, although, when excluding high rollers, this
result was up 1.3% to £585.4 million. Revenue from its UK retail
operation was up 3.2% to £410.5 million, while digital revenue jumped
6.9% to £112.1 million but posted a loss of £11.5 million, compared
to a £3 million profit last year.
Revenue from its European
retail operation was up 1.7%, but its core telephone betting operations
suffered a heavy drop of 53.4% to £2.7 million. Headline operating profit
amounted to £38.9 million, down 31.5% on the same period last year.
UK retail operating profit fell 1.2% to £56.9 million while
European retail and core telephone betting operations also suffered losses.
In addition, Ladbrokes has agreed a deal in relation to an early
determination of amounts due it under a marketing services agreement with
Playtech date March 2013.
The deal, which was agreed ahead of the Coral
merger, will see Playtech receive £75 million, of which £40 million
will be satisfied by issued shares and £35 million in cash. Should the
Gala Coral deal not go ahead, the existing agreement will continue in its
Ladbrokes and Coral tried to merge before. In 1998 that
planned deal was squashed by Peter Mandelson, the trade and industry minister
at the time, on the grounds that it would dominate the industry. Yet at that
time the biggest threat to Ladbrokes and Coral did not even exist. The
rationale behind this merger is to create a company that will stand a better
chance of competing with online giants like Betfair and Bet365.
comes just over a week after online bookmaker 888 Holdings won a takeover
battle with GVC Holdings for rival Bwin.party in a cash and shares deal valued
at about £898m.