Ladbrokes Investor Deems Gala Coral Merger ‘Wrong’
Irish businessman and Ladbrokes investor Dermot Desmond has opposed vocally the proposed £2.3-billion mergerbetween major UK gambling operators Ladbrokes and Gala Coral in a letter to fellow shareholders.
Mr. Desmond has been a shareholder in the gambling company for the past nine years, holding a 1% stake in it. He is known to be the founder of betting exchange BETDAQ. The businessman has also had a long-standing interest in various initiatives related to the gambling industry, including GBE Technologies and Irish betting company Chronicle.
The Irish billionaire urged in his letter Ladbrokes’ “passive” shareholders to block the proposed merger as it would be a wrong deal for the company. According to Mr. Desmond, Ladbrokes has managed to create a strong brand, but experienced setbacks in successfully migrating its existing gambling customers online. In order to do this, the company will have to implement certain changes in its current management team, he added.
The Ladbrokes investor further noted that Coral shareholders will be the ones to benefit the most from the proposed merger. Mr. Desmond wrote that if the deal is completed, they will be given access to “liquidity for their shares” and will be significantly relieved from a £2.2-billion debt. What is more, Playtech will establish itself as the key platform provider to both Ladbrokes and Gala Coral and will be paid an incentive payment settlement of £75 million for its software deal with Ladbrokes.
Mr. Desmond concluded his latter by saying that he believes Ladbrokes has everything needed to return to its former glory of a “great company” and to turn into a “major force” in the constantly growing online gaming market. He also urged Ladbrokes shareholders to vote against the proposed merger as it would not be a good deal for them.
Investors are to vote on the £2.3 billion transaction at a special general meeting, scheduled for next Tuesday. If approved, the deal will result in the creation of what will be the largest betting shop chain across the UK. Although Mr. Desmond repeatedly pointed out in his letter that Ladbrokes shareholders will be the losing party in the merger, they will actually hold a 51.25% stake in the new company.
The merged entity will be headquartered in London and as mentioned above, its stock market value will amount to £2.3 billion. The new gambling operator is expected to generate revenue of more than £2.1 billion annually.