Ladbrokes And Gala Coral In Talks Over Merger

Ladbrokes’ shares rose sharply after the High Street bookmaker confirmed it was in talks with rival Gala Coral over a possible merger that would create the UK's largest gambling firm.

Shares (Berlin: DI6.BE - news) in Ladbrokes (LSE: LAD.L - news) surged by more than 10% on the news it was in early discussions with Gala over a deal to form a business with nearly 4,000 betting shops.

But any merger between the second and third largest bookies in Britain is set to trigger competition concerns.

Ladbrokes tried to take over its rival back in 1998 but was forced to abandon the bid after it was blocked by the then Trade and Industry Minister Peter Mandelson on competition grounds and amid fears it would disadvantage punters.

However, if the latest deal does go ahead it would see the merged firm oust William Hill (Other OTC: WIMHY - news) as the biggest UK bookmaker.

The tie-in would bring together around 2,100 shops from Ladbrokes and 1,845 from Coral.

Ladbrokes said the merger talks related to Coral Retail, the UK bookies business, Gala Coral's 870-strong Eurobet division in Italy and Coral's online arm.

Ladbrokes chief executive Jim Mullen said: "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.

"The board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms."

The merger talks do not include Gala's 132-strong bingo business.

Gala Coral said as well as the merger talks, it was looking at "all strategic options" for the firm, including a possible flotation on the stock market.

It added: "There can be no certainty that the discussions between Ladbrokes and Gala Coral Group will lead to any agreement and Gala Coral Group remains confident in its future as a standalone business with highly attractive future potential."