Ladbrokes Coral merger given provisional green light
Competition and Markets Authority says full clearance dependent on the sale of between 350 and 400 retail shops
The proposed merger between Ladbrokes and Gala Coral was this morning given the provisional green light by the UK Competition and Markets Authority (CMA), subject to the sale of 350 to 400 high street shops.
The competition watchdog’s provisional report highlighted 659 local areas it deemed were likely to find a “substantial loss of competition”, which could lead to a potential worsening offer for customers in the long-term and added shop sales may be needed “for the merger to be conditionally cleared”.
As part of its phase two investigation into the merger, the CMA also considered whether the operator’s online and retails businesses were “substitutable” but concluded there wouldn’t be a sufficient number of punters migrating to online to result in a deterioration of the retail product.
The CMA has invited comments on its report and possible remedies by Monday 6 June and has extended the investigation’s final reporting deadline by eight weeks from 24 June to 19 August in order to fully consider, among other things, third-party responses and shop disposal locations.
Ladbrokes has 2,154 betting shops in Great Britain, as well as 77 in Northern Ireland, while Coral also owns 1,850 shops in Great Britain. Combined with William Hill and Betfred, the ‘big four’ control 87% of the retail market.
Early estimates indicated Gala Coral and Ladbrokes may have had to dispose of as many as 1,000 shops in order to get clearance for the deal, which was agreed between the two parties in July.
Today’s lower figure would see a combined Ladbrokes Coral overtake William Hill as the retail market leader and speaking to EGR this morning a spokesperson for Hills said the firm would “continue to engage fully in the process during the next phase”.
Ladbrokes director of media David Williams described today’s findings as a “significant milestone” and said the firm would now focus on “completing the shop disposals that the CMA have indicated they require”.
Gala Coral this morning said it would “continue to work with the CMA in order to agree these remedies, but the CMA has indicated the sale of 350-400 shops would enable a final determination in favour of the proposed merger”.
Ladbrokes’ share price received a boost on today’s news and was up 10% to 131.81p after early morning trading.