Boylesports says it bid more than winner in betting shops sale

Ladbrokes and Gala Coral to sell 359 shops for £55m to ease merger between the two

In July the UK’s Competition and Markets Authority said the merger could proceed subject to the divestment of 350 to 400 shops. Photograph: Moya Nolan

In July the UK’s Competition and Markets Authority said the merger could proceed subject to the divestment of 350 to 400 shops. Photograph: Moya Nolan

 
BoylesportsLadbrokesGala Coral

The sale took place under regulatory pressure to sell a tranche of UK betting shops to rivals, in order to smooth the passage of a merger between the two.

Ladbrokes and Gala Coral have agreed to sell 359 shops to rivals for £55.5 million (€62 million) in a deal that will allow competition authorities to authorise their £2 billion (€2.83 billion) merger.

Boylesports, however, said it is “disappointed” to have missed out its bid because its bid was higher than the winning bids.

“[Our bid] was fully-funded, was cognisant of the changing political and regulatory UK landscape, and could have been completed within two weeks of acceptance,” Boylesports said.

The Irish bookmaker is consulting its solicitors and said it is planning to write to the UK’s Competition and Markets Authority (CMA) to highlight its “concerns”.

“BoyleSports believes the decision not to allow a challenger brand on to the UK high street is bad for retail consumers who would have benefited from the keen pricing and excellent service already available to our existing Irish retail customers and to online customers in Ireland and the UK,” it said.

In a statement on Monday, Ladbrokes said the two companies have agreed to sell a total of 359 licensed betting shops to Done Brothers (Cash Betting) Limited, which trades as Betfred, and StanJames (Abingdon) Limited, which trades as Stan James.

Irish bookmaker Boylesports had signalled that it could bid for the shops, but Betfred will purchase 322 for £55 million, while Stan James will purchase 37 for £500,000.

In response to the Boylesports statement, a Ladbrokes statement said: “Failed bidders are well within their rights to raise their issues with the CMA but we are comfortable with our decision based on the bids received in the process.”

Earlier, a spokeswoman for Ladbrokes said the list of shops has not yet been released, although it is understood the sale does not include Irish shops.

The exchange of contracts is conditional upon the approval of the CMA and the completion of the merger of Ladbrokes and the Coral Group.

The £55.5 million for the sale of the 359 shops is payable to each of the vendors in proportion to the profitability of the shops. It is intended that the money received will be used to repay debt.

In July, the CMA said the merger could proceed subject to the divestment of 350 to 400 shops, and that completion of the merger could occur when the shop divestment process was substantially complete. Significant hurdle Ladbrokes chief executive Jim Mullen said the sale of the shops “will clear the last significant hurdle to delivering on the merger with Coral, and paves the way for our focus on completion and quickly delivering on the opportunities the merger offers”.

In a note Davy said the CMA’s move to effectively force the bookmakers to sell the units had “immediately put them on the back foot when it came to negotiating a price”.

“A shortage of viable bidders was also a factor given that the CMA insisted that the buyers have demonstrable experience in running such shops.

“The valuation undoubtedly also includes a discount for regulatory uncertainty ahead of the pending review of gaming machines in the United Kingdom.

“We continue to believe that the combined entity will be stronger than its individual parts and therefore are supportive of this merger. However, the mood music in relation to UK machines remains ominous. Better to wait and buy when there is regulatory certainty, in our view.”