Ladbrokes Coral and GVC Holdings in 'detailed' talks about £3.9bn merger

Shares in Ladbrokes Coral were up by more than a quarter in early trading despite uncertainty over the government’s consultation over fixed-odds betting terminals

Gambling giant Ladbrokes Coral is in "detailed" talks over a takeover by online rival GVC over a deal that could value the group at up to £3.9bn.

GVC, which owns Sportingbet and Foxy Bingo, has put forward a cash-and-shares offer valuing Ladbrokes at 160.9p a share, with additional loan notes worth 42.8p a share.

Under the deal, GVC shareholders would own 53.5% of the combined group, and Ladbrokes Coral shareholders 46.5%.

"The boards believe that a transaction has the potential to create material shareholder value and that there is a compelling strategic rationale for the possible offer", the statement said.

On Thursday, they said GVC had made a non-binding cash and shares offer to Ladbrokes, with the final price determined by the outcome of the government's review into gambling machines in United Kingdom betting shops, which could hit profits at the target company.

"The enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector", the companies said.

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Last month, GVC announced the sale of its Turkish subsidiary, removing a potential obstacle to a deal with Ladbrokes, which had raised this as one sticking point during August's talks.

According to the statement, the purchase price would depend on the outcome of the highly-anticipated triennial review into the United Kingdom gambling industry, in which the government is expected to call for a significant reduction in the maximum stake playable in fixed odds betting terminals.

Acting as the deal leader, GVC investors would own a majority 54.5% shareholding in the combined enterprise. Discussions in the summer broke down over a price dispute shortly before the government's gambling review.

'GVC should get plenty of cost savings, while the combination would bump up its exposure to some of the world's largest regulated online gaming markets, including the UK, Italy and Australia'.

The news comes just a year after Ladbrokes and Gala Coral completed a merger.

The Department for Digital, Culture, Media and Sport said in October that the government would cut the maximum bet on the machines from £100 to between £2 and £50. GVC shareholders would be entitled to the rest.