Ladbrokes And Gala Coral Hold Merge Discussions

Publicly traded shares in gambling operator Ladbrokes have risen following an announcement that they are holding discussions with Gala Coral regarding a possible merger.

Ladbrokes has this week confirmed that it is currently in talks with Gala Coral about the possibility of a merger between the two gambling companies. This follows several weeks of speculation that Ladbrokes could be the target of takeover bids from rival companies. The Irish bookmaker Paddy Power in particular has been strongly linked with an acquisition.

Any potential merger could attract the attention of the Competition and Markets Authority in the United Kingdom, as Ladbrokes and Gala Coral are currently the second and third largest bookmaking firms in the UK respectively. They would become the single largest if joining together, overtaking William Hill, with a combined chain of over 4,000 bookmaking shops. When Ladbrokes previously launched a bid to purchase Gala Coral, back in 1998, the move was blocked by the government.

Shares in Ladbrokes rose over 10% following the announcement. The company has not been delivering good results for its shareholders in recent times, with disappointing first quarter figures for 2015 and a reported decline in footfall in its shops. There was also a large fall in pre-tax profit for 2014, to £38 million from £68 million.

Jim Mullen, the chief executive officer appointed earlier this year, has been working to improve the performance of the company since taking over from Richard Glynn, and he had this to say on Monday night:

“Since becoming CEO my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes. My plans are well advanced and I look forward to presenting them to shareholders.”

On subject of the merger specifically, Mullen continued:

“A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders.”

At the time of writing there has been no official comment from Gala Coral.