April 17, 2016

UK watchdog may require Ladbrokes Coral sell 1K betting shops

The proposed merger of UK gambling giants Ladbrokes and Gala Coral Group may have hit a snag over how many retail betting shops the companies will be forced to sell.

The UK’s Competition Markets Authority (CMA) was expected to issue a provisional decision by April 18 on whether to permit the £2.3b Lads-Coral merger to proceed. On Thursday, City AM quoted sources saying that this timeline was now ‘highly unlikely.”

While the CMA’s final ruling on the merger is still expected to be released on June 24, City AM’s source claimed a potential hiccup had arisen over how many of the two operators’ combined 4k betting shops would need to be sold off to address competition concerns.

Scuttlebutt had it that the two operators would be required to reduce their retail presence by between 300 and 500 shops, but City AM claimed the CMA may require as many as 1k shops to be sold to smaller betting operators to ensure a healthy and competitive market for retail punters.

The CMA is expected to identify which shops give it the most competition concerns and the CMA is also believed to be insisting that the shops in question be sold rather than merely closed, public knowledge of which could put Lads-Coral in an unwanted ‘motivated seller’ position when it comes to negotiating prices for these shops.

The merger has been opposed by rival William Hill, whose high street dominance would be eclipsed should the Lads-Coral union receive the regulatory thumbs-up. The CMA’s reported insistence on a larger sell-off of shops may be a response to Hills’ objections, which claimed the market “may not be capable of establishing the third national force which would be lost as a result of this merger.”

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