Ladbrokes deal synergies likely to take four years

Online gambling group, GVC, is likely to take four years to realise its targeted, £100m (€113m) cost synergies, from its proposed, £4bn takeover of betting giant, Ladbrokes-Coral, writes Geoff Percival.

GVC — which owns the likes of Foxy Bingo, Sportingbet, and Bwin — has reached agreement to buy Ladbrokes-Coral. The deal is expected to be complete before the halfway point of next year.

The final price will be dependent on the outcome of the UK government’s review of fixed-odds betting terminals in bookie shops — money-spinners for the likes of Ladbrokes — which is due next month.

Ladbrokes generated £800m in revenue from gaming machines last year. The tie-up comes against a backdrop of tightening regulation in the British gambling industry, which has grown to a multi-billion pounds sector over the last decade.

“While we believe the merger is the right move, strategically, we think GVC’s current valuation looks full,” said Davy analysts, David Jennings and Joseph Quinn, in a research note.

“We think it is noteworthy that much of the savings are technology-related, and we believe that the majority of these are expected to come in year four, probably reflecting the current contracts the business has with third-party technology providers,” they added.

The combined group is expected to be large enough to enter Britain’s FTSE 100 index.

KEYWORDS: Ladbrokes, GVC, Gambling


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