Ladbrokes Coral Merger Delayed as Regulators Considering Ordering Shop Selloff

A slight but not wholly unexpected delay has occurred in the ongoing merger process between UK giant gambling firms Ladbrokes and Gala Coral, with the combined new entity (to be called Ladbrokes Coral) now facing the increased possibility of a regulator-ordered selloff of as many as 1,000 of its UK-based betting shops.

The UK’s Competitive Markets Authority was widely expected to have issued a provisional approval of the Ladbrokes-Coral move by April 18^th, though a behind-the-scenes protest by rival UK giant William Hill continues to be a thorn in the side of Laddies’ and Gala Coral’s attempts to unite their businesses as rapidly as possible.

Back in February, we reported on the protest filed by William Hill with the CMA over the merger between Laddies and Coral, which pre-merger ranked as the UK’s second- and third-largest gambling firms. (William Hill itself is the UK’s largest.) William Hill’s counsel cited UK’s anti-monopoly laws in protesting against the merger, arguing that the UK market “may not be capable of establishing the third national force which would be lost as a result of this merger.”

Color me cynical – it’s truly doubtful that Bill Hill’s interests are really so consumer-oriented; it’s more about making sure William Hill itself remains in as strong a position as possible, even if no longer necessarily s the UK’s #1 gambling dog.

Anyhow, the CMA has been mulling the issue, weighing such things as a similar decision that went against an earlier planned Ladbrokes merger nearly two decades ago, though that one was in the pre-Internet age, when the amount of physical betting shops present had a far larger impact. Most gambling firms today generate as much as 85% of their business from online traffic.

Most market watchers also believed that the CMA would allow Ladbrokes Coral to close several hundred shops in what was, more or less, a process of natural attrition and closure of redundant, neighboring outlets. Instead, the new reports suggest that the new Ladbrokes Coral might be ordered to sell off as many as 1,000 shops, which just might enough – hint, hint – to leave Laddies as the UK’s #1 book in terms of the umber of physical shops the company operates. Ladbrokes and Gala Coral together operated well over 4,000 shops, and if ordered to sell of nearly a fourth of those outlets, would have a bit of a real-estate mess on its hands as well.

The battle seemingly rages on. In recent days, UK business-news outlets, citing confidential MA sources, have declared that it’s “highly unlikely” that the provisional merger approval would be issued by its original Monday, Apriil 18^th deadline. The final approval deadline of June 24^th remains on track for now, though there’s the possibility that that could be shoved back as well.

The latest reports suggest that the CMA may order as many as a thousand of the potential Ladbrokes-Coral shops, post merger, to not be shuttered, but instead be sold to possibly interested, third-party gambling firms, in what would be both a sop to William Hill’s legal challenges and to the concept that such a forced selloff is relevant to any “monopoly” situation in the UK anyway.

It’s not, of course. Given how much of the industry’s traffic has moved online, the existence of physical betting shouldn’t even be considered any longer in connection with monopolistic concerns.

We expect the Bill Hill-engineered monkey wrench to not cause too much of a delay in the merger, which at a face value of £2.3 billion remains among the gambling world’s largest-ever business deals. If nothing else, the episode serves as an illustration of how quaint the notion of “monopoly” has become in the online age.