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Gala and Ladbrokes in talks over possible merger

In a move that would create the UK’s largest gambling company, Ladbrokes has revealed it is in talks with rival Gala Coral Group to merge the two firms. A merger between the country’s second and third largest bookmakers would see them overtake current market leader William Hill with almost 4,000 outlets nationwide. Shares in Ladbrokes rose by more than 11% following the announcement. 

Could Gala and Ladbrokes combine forces?

 Jim Mullen, who was appointed chief executive at Ladbrokes just three months ago said: “A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies’ shareholders. “The board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms.” The proposed deal would see Ladbrokes be combined with Coral Retail, Eurobet Retail and Gala Coral’s online firms. There are no plans to include Gala Coral’s bingo business in the agreement. However, the talks may yet come to nothing as the merger may contravene rules on competition. In 1998 Ladbrokes made moves to take over Gala but the bid wasn’t successful as it was blocked by Peter Mandelson, the Trade and Industry Minister at the time. His argument was that it would result in “a weakening of price competition at the national level” and give customers less choice. Concerning the proposed merger, Ladbrokes has stated that talks are still at an early stage and that there is no guarantee that the discussions will lead to a deal. A spokesperson for Gala Coral said, “There can be no certainty that the discussions between Ladbrokes and Gala Coral Group will lead to any agreement and Gala Coral Group remains confident in its future as a standalone business with highly attractive future potential.”