Done Deal: Ladbrokes-Gala Merger Now Official

The deal has been closed: Ladbrokes and Gala Coral are merging after a long period of negotiation.

The New Group

The new company will become the biggest bookmaker in the UK, at a new worth of £2.3bn, taking the title from William Hill. To be listed as Ladbrokes Coral on the London Stock exchange, the new group will have close to 4,000 betting shops and 30,000 employees, and will be required to sell some outlets to satisfy competition authorities.

Leadership

HBOS ex-boss Andy Hornby was appointed CEO of the new group, and stands to collect a significant bonus. He previously served as CEO of failed bank HBOS, ultimately bailed out by Lloyds Banking Group.

Shareholder resistance will keep Hornby off the board for now. The wait-and-see attitude likely hedges on concerns over the pending release of a regulatory report into HBOS, a result for which Hornby received a parliamentary condemnation from the commission on banking standards. Along with other HBOS directors, Hornby was held responsible for mistakes that led to what the Parliament labeled a “colossal failure.”

Expressing the Coral view, Ladbrokes CEO Jim Mullen reaffirmed his faith in Hornby's abilities: “Andy Hornby is a first-class executive that this combined group is lucky to have.”

Benefits

Coral is a privately owned, private equity firm. The added purchasing power and liquidity should bolster technological development and marketing to bolster competitiveness with more successful online rivals William Hill, Paddy Power and bet365. The new deal will divide the shares according to 48.25% for Coral shareholders, and 51.75% for Ladbrokes shareholders.

Rumored since last month, the new deal is expected to bring profits of £392m to the new group, along with savings of £65m a year through elimination of redundant activity in the back office. Ladbrokes announced the placement of 93m shares representing 10% its share capital to fund the deal.