Ladbrokes Coral Merger Contingent on Selling of Shops
The merger between Ladbrokes and Gala Coral, that would create Ladbrokes Coral, isn’t quite official. Per reports, the two sides are trying to figure out how to finalize the merger process with an estimated 350 to 400 shops needing to be sold.
The Competition and Markets Authority (CMA) declared in it’s initial findings that a good number of shops would have to be sold in order to offset competition concerns.
— Bloomberg (@business) May 20, 2016
This wasn’t a surprise for either Ladbrokes or Gala Coral, as the two sides new that joining up would give them a bloated retail division. That has all along been their biggest issue going into a merger, and per the CMA, it’s one that will soon be forced to address.
To start, the CMA has pointed to roughly 659 specific areas where the merger may produce a sizable loss of competition. A more finalized number should be produced when the CMA issues it’s final reports later this summer, aiming for late July.
No Other Snags
The good news is that there have been no other glaring issues reported by the CMA, so once the two sides can figure out which shops they will end up parting with, the company can move on, officially unified.
Ladbrokes brings 2,154 UK betting shops to the merger, while Coral is responsible for 1,850 shops in the country, as well. Per the provisional findings from the CMA, the further away the shops can be from each other, the less competition interferes with operations.
“The evidence available to us indicated that LBOs compete more strongly the closer they are to each other geographically and that, as such, distance is generally a good proxy for the strength of competitive constraint. More specifically, we found that the competitive constraint one LBO exerts on another LBO diminishes sharply as the distance between them increases.”
The two sides have been allowed until June 6th to respond to the findings and a final ruling on the merger is expected to follow.
Ladbrokes issued a statement regarding the merger and subsequent selling of shops:
“Our focus now will continue to be to work with the CMA to progress the merger to focus on finding a suitable buyer or buyers in order to deliver the necessary remedies.”
Ladbrokes and Coral also stated that the deal would allow for numerous opportunities, specifically the ability to produce quicker online growth. Originally set forth in June of last year, the merger could be made official as early as next month.
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