Analysts warn that Ladbrokes – Gala Coral mega merger odds on for competition issues

Analysts are warning that Ladbrokes' multi-million pound merger with Gala Coral could have to jump serious competition hurdles.

 

The combined company would command 4000 retail shops – about 45 per cent of the UK market – and give the group much better odds in the online gaming space too. 

 

The retail position in particular could lead the Competition and Market Authority (CMA) to call for some of the estate to be sold off.  

Such a move could lead to job losses. “It is hard to know what shops are going to go,” Panmure Gordon analyst Karl Burns said. He added that if you work in a shop “you could lose your job, definitely.”

 

David Jennings of Davy agrees that job losses “would depend on what the competition authority says regarding the number of shops that would need to be disposed of and whether other buyers can be found for those shops."

 

Paddy Power, or even William Hill, could be potential buyers.

 

The issues around shop numbers ignores that much of this deal is to try and improve Ladbroke’s online business,” according to Burns. “The online side is definitely the big draw to this,” he said.

 

Corporate finance firm Cavendish agrees, expressing the view that “The strategic appeal for Ladbrokes is to consolidate its online bookmaking offering, where it has been less competitive than others and must invest in order to capitalise on consumers’ migration to mobile platforms.”

 

Although the firms have not given a number, market estimates value the deal at between £3-4bn

 

Integration between the two firms would be easy, as they both use technology provided by Playtech.