Ladbrokes takes step closer to Coral takeover – but it could be forced to shut 400 shops first
Shares in Ladbrokes were up almost 12 per cent this morning, after the competition watchdog suggested its takeover of Gala Coral was nearing the final furlong.
But first the betting chain could be forced to close as many as 400 shops.
Shares in the bookie hit 133.3p in mid-morning trading after the Competition and Markets Authority said the betting merger could only go ahead if the two firms resolved its concerns by reducing the number of shops operated in the UK.
Ladbrokes and Coral are the second and third largest bookies in the country – the former more than 2,200 betting shops across Britain and Northern Ireland, while Coral runs 1,850.
The watchdog said a review had "659 local areas where it provisionally found that the merger may be expected to result in a substantial loss of competition, which could lead to a worsening of the offer made to customers at both a local and national level".
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It has put forward a list of possible solutions, one of which asks for views on "whether divestiture would be a suitable remedy".
The CMA has extended the deadline for its final report by eight weeks to 19 August "in view of the scope and complexity of the investigation, which involves numerous local areas". The group, however, is aiming to publish its final report by the end of July 2016.
Martin Cave, inquiry chair, said:
We’ve provisionally found that the merger between two of the largest bookmakers in the country may be expected to reduce competition and choice for customers in a large number of local areas. Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a large number of customers still choose to bet in shops – and many would continue to do so after the merger.
For these customers, competition comes from the choice of shops in their local area and it’s they who could lose out from any reduction of competition and choice. Discounts and offers of free bets to individual customers are ways betting shops respond to local competition which could be threatened by the merger. We’re also concerned that such a widespread potential reduction in competition at the local level could worsen those elements that are set nationally such as odds and betting limits.
We’ll now consider responses to our provisional findings before coming to a final decision. If our provisional findings are confirmed and divestiture would be a suitable remedy, Ladbrokes/Coral may have to sell a large number of shops to a suitable purchaser or purchasers in order to preserve competition in those local areas. We’ll need to look closely at the exact number of shops and areas that would be involved – the overall size and complexity may mean that the sales need to be substantially completed before the merger can go ahead.