Yahoo Finance Billionaire Urges Rejection Of Ladbrokes Deal
Billionaire businessman Dermot Desmond has written to fellow shareholders in bookmaker Ladbrokes (LSE: LAD.L - news) urging them to reject a £2.3bn merger with Gala Coral at a meeting next Tuesday.
The two companies agreed a tie-up in the summer to create a betting group that would seek to build on its dominance of Britain’s high street to expand its online business.
Mr Desmond, who is the majority owner of football club Celtic (LSE: CCP.L - news) , said Ladbrokes needed a new management team to lead the shift to online but that the merger was not the right way to achieve it.
He said: "Giving away half your company and taking on over £800m of debt is a very expensive way to recruit a quality management team.
"The real winners in this transaction are the Coral shareholders."
In his letter, Mr Desmond said Ladbrokes shareholders would see dividends slashed and that he believed cost savings would be difficult to deliver as Coral and Ladbrokes will maintain separate brands after the merger.
A spokesman for the Irish billionaire said he had a "substantial shareholding" in Ladbrokes.
The bookmaker said in a statement that it was not surprised by Mr Desmond's views but remained "confident that shareholders see the attraction of the proposed deal".
In August, Ladbrokes reported a £51.4m loss for the first half of 2015 after dozens of shop closures in the UK and Ireland (Other OTC: IRLD - news) . It (Other OTC: ITGL - news) said earnings were hit by a "need to reset the business and invest".
Chief executive Jim Mullen admitted that "short-term thinking had come to dominate Ladbrokes' actions" but insisted new targets over the next couple of years would help it improve.
