The proposed merger between bookmakers Ladbrokes and Coral have been voted by Ladbrokes shareholders at the group’s extraordinary general meeting, which took place this morning in London. Holders of 70 billion shares among the total of 100 billion voted in favor of the merger.
Though Irish billionaire shareholder Dermot Desmond criticized it publicly, the bid garnered over 90% votes from eligible voters. However, Desmond, who owns around 3% share of Ladbrokes, continues to condemn the deal and Ladbrokes’ board and management. He said that there “were smarter deals the firm could have done”.
“In these discussions it has become clear that while most have placed their proxy in favor of the resolutions, they have huge sympathy with the points we raised and are voting for the Coral transaction out of a sense of frustration and resignation with the current board and management,” said Desmond in his speech, “I share their frustration, but not their resignation.”
Desmond indicated that the deal “could be a deal too far for Ladbrokes shareholders”. “The company’s total debt burden will increase by four times to £1.2 billion. Given the increased exposure to a declining and increasingly regulated retail sector, Ladbrokes will encounter significant and growing challenges in servicing these levels of debt,” Desmond added. According to him, Ladbrokes’ total profit before tax dipped by 40% in the last 5 years.
The combined entity of Ladbrokes and Gala Coral, the idea of which was put forward in July, is worth approximately £2.3 billion (€3.2 billion/$3.6 billion). However, the deal has not yet got regulatory approval, and is going to be investigated by the Competition & Markets Authority (CMA).
The newly branded Ladbrokes-Coral merger is expected to procure net revenue of £2.1 billion, besides earnings before interest, tax, depreciation and amortization of £392 million, excluding cost synergies of at least £65 million – said both Ladbrokes and Coral.