Ladbrokes-Gala Coral deal clearance may depend upon store sales

Bookmakers Ladbrokes and Gala Coral may need to shed numerous stores if their proposed merger is to go ahead, the competition guard dog has said.

The Competition and Markets Authority said a merger of the UK's second and third biggest bookmakers may limit competition on the High Street.

About 350 to 400 shops may have to be sold "for the merger to be conditionally cleared", the CMA stated.

The CMA has provided till 13 June for reactions to its provisional findings.

Ladbrokes runs 2,154 wagering shops in Great Britain and 77 in Northern Ireland, while Gala Coral runs about 1,850 wagering shops in Great Britain.

the yohaig code combined group would make it larger than existing market leader William Hill.

Martin Cave, who is chairing the CMA's query, stated: "We have actually provisionally discovered that the merger between 2 of the biggest bookies in the yohaig code nation may be anticipated to minimize competition and option for clients in a large number of cities.

"Although online betting has actually grown significantly in the last few years, the proof we have actually seen verifies that a a great deal of customers still choose to bet in shops - and numerous would continue to do so after the merger.

"For these consumers, competitors comes from the choice of stores in their city and it's they who might lose out from any reduction of competitors and option."

The CMA stated it was intending to release its last report by the end of July.

Ladbrokes stated: "This is a substantial step and our focus now will be on agreeing the store disposals to satisfy the CMA." Ladbrokes shares had jumped 6.5% by the close of trade on Friday.

Gala Coral stated it noted that the CMA was "provisionally minded to clear the yohaig code proposed merger" and that it would continue to work with the regulator on ways to attain final clearance.

Analysis: Frank Keogh, BBC Sport racing press reporter:

The face of Britain's wagering stores has actually transformed in the last 20 years - from smoky boltholes with horse racing dominating procedures to shiny multi-screen sport outlets where fixed-odds wagering terminals are a big earner.

While critics state the casino-style machines have motivated issue gamblers, the bookmakers insist staff are trained to watch out for problems.

The bottom line is the rise of the yohaig code devices has assisted keep a number of these stores open in a modern-day betting world where online gaming has actually mushroomed.

And while some stores look destined to be casualties, this proposed ₤ 2.3 bn merger shows there is plenty of money still to be made in the British betting industry.

Analysts say the merged company will still have a dominant position even if many stores have to be sold.

"We anticipate significant expense saving will be possible because there will be huge areas of overlap and unnecessary duplication of functions across the combined service," stated Steve Clayton, head of equity research at Hargreaves Lansdown.

Ladbrokes concurred the regards to a ₤ 2.3 bn all-share merger with Coral in July, and the business's shareholders backed the deal in November.

Ladbrokes earnings struck by writedowns

11 August 2015