GVC to Buy U.K. Bookmaker Ladbrokes for Up to $5.4 Billion

(Bloomberg) -- GVC Holdings Plc agreed to buy U.K. bookmaker Ladbrokes Coral Group Plc for as much as 4 billion pounds ($5.4 billion) as gambling companies seek greater scale in a business that’s shifting online.

Investors will receive as much as 207.2 pence for every Ladbrokes share, the companies said in statements Friday. That would be 19 percent higher than Thursday’s closing price. Ladbrokes shares rose as much as 1.7 percent Friday, while GVC fell as much as 2.8 percent.

A combination of GVC, which owns online gambling platforms including Partypoker and Sportingbet, and betting-shop operator Ladbrokes Coral could spark even more consolidation in the sector. Ladbrokes Coral, whose traditional betting shops in the U.K.’s town centers are fading, would get more exposure to the expanding digital gaming business, while GVC could reach more potential customers for its online platforms.

“The merger is the right move strategically,” wrote David Jennings and Joseph Quinn, analysts at Davy.

GVC said it expects annual cost savings from the transaction of at least 100 million pounds by 2021. The merger would follow previous combinations like that of Paddy Power and Betfair as well as Ladbrokes with Coral.

GVC is offering 164.40 pence in cash and stock, plus a contingent payment of as much as 42.80 pence a share. The value of the contingent right would be determined by the outcome of a U.K. regulatory review of electronic betting terminals, according to the statement. That could result in sharply reduced wagers via the machines, cutting shop owners’ revenue.

Speculation about a combination of GVC and Ladbrokes emerged last year, and the companies announced they were in advanced talks on Dec. 7.

To contact the reporter on this story: Thomas Mulier in Geneva at tmulier@bloomberg.net.

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John J. Edwards III, Tom Lavell

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