Ladbrokes, Gala Coral set for merger decision

16 May 2016

Ladbrokes and Gala Coral are expected to find out this week find out if their proposed merger is to be allowed by the UK’s Competition and Markets Authority (CMA).

Various reports suggest that the competition watchdog will allow the £2.3 billion (€2.9 billion/$3.3 billion) deal to proceed, although the combined entity – which will become the UK’s biggest high street bookmaker - is expected to be forced to sell hundreds of their betting shops.

Ladbrokes and Coral, the second and third largest betting shop operators behind William Hill, are confident that the CMA will allow the merger having concluded that retail betting, comprising almost 9,000 shops, should be considered in the context of the wider market, including online.

However, some analysts have pointed to last week's decision by the European competition watchdog to prevent the merger of telecoms giants O2 and Three - a stand that was supported by the CMA - as a sign that the deal could be thwarted.

The merger was opposed because the market would be reduced from four big players to three, with a similar change in the retail betting market set to take place if Ladbrokes and Gala Coral were to combine.

William Hill was among the interested parties that called on the CMA to halt the merger over competition fears within the retail market. In its submission to the inquiry. William Hill claimed that competitive pressures in the retail market were “more local than national” and were based on location and quality of service.

It said digital betting had not had a significant impact on retail, a contention which was backed up by a report in the Times newspaper which showed that about three quarters of retail punters placed bets only in shops.

Should the deal be allowed, industry insiders believe the CMA will say that about 500 of the operators’ combined 4,000 outlets must be sold to satisfy concerns about competition.

Related articles: CMA expects provisional ruling on Gala Coral-Ladbrokes deal in May

Ladbrokes to complete proposed merger with Gala Coral