GVC and Ladbrokes Coral Group have today (Thursday) revealed that they have held “detailed discussions” over a possible merger agreement.
In a statement, Ladbrokes Coral said it has received a non-binding proposal from GVC for a potential offer for the entire issued and to-be issued share capital of the business.
Based on share prices as at the close of business yesterday, the GVC offer values Ladbrokes Coral at 160.9p per share, which equates to a total equity value of £3.1bn (€3.5bn/$4.1bn).
Should GVC go ahead with the offer, Ladbrokes Coral shareholders would receive 32.7p in cash and 0.141 ordinary GVC shares for each share, as well as a potential further value of up to 42.8p structured as a contingent value right.
The news comes after the Financial Times newspaper in October reported that a merger deal between the two companies was close.
Terms of the offer mean that Ladbrokes Coral shareholders would hold 46.5% of the combined business, with GVC shareholders to other 53.5%.
In addition, the companies have agreed that should the deal go through, Kenneth Alexander, currently chief executive of GVC, would take on the same role at the enlarged group.
“The boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer,” the two companies said in a joint statement.
“The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel 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.
“The enlarged group would have strong growth prospects with momentum in its online businesses, potential for material synergies including the use of leading proprietary technology, and the opportunity to select the best of both people and operations.”
GVC has until 5pm GMT on January 4 to announce a firm intention to make a formal offer for Ladbrokes Coral, although this deadline could be extended upon request.
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