Ladbrokes has struggled just a bit in the UK lately. Granted, their gains in Europe, particularly Italy, have made their overall numbers look healthy, but a recently reported loss in wagering percentage over the last season in the UK market underpins their stagnation back home. Barclays analysts reported that they were down 9% on overall wagering across the last four months. Still the brand has tremendous value, and GVC are hoping to be third time lucky in their latest effort to reach a deal.
This time around, one problem afflicting any possible deal between the two has been the uncertainty regarding the government’s final position on new limits for fixed odds betting terminals, but GVC has in the end submitted a flexible bid to Ladbrokes, ranging from £3.1 billion if the limit is set to its lowest level of £2, up to £3.9 billion if it is limited to the highest anticipated option of £50.
Despite a great run in recent years, fuelled by the acquisition of major names like Sportingbet and Bwin, GVC shareholders do not always see eye to eye with senior management’s decision-making. Just this week, over 25% of investors voted against a new policy for paying directors, and against a new bonus plan on offer. Chair Jane Anscombe has stated that this comes down to a disagreement over what incentive levels are needed to retain top management figures in the industry.
Still, the news that GVC and Ladbrokes were in detailed discussions last week about a merger has already led Goldman Sachs to cut from “neutral” to “buy” with Ladbroke’s share price raised in a significant initial surge of almost 25%.
The reason for GVC coming in now with a flexible offer, instead of waiting for the government’s final call on FOBTs? Simple: first mover advantage. GVC wanted to get in ahead of any competition. This is a smart move which has garnered them applause, as well as an uptick in their own share price. A formal offer is expected by early January, and the deal could complete by the middle of 2018.
