Ladbrokes turns focus to beating betting shop rivals

Planned merger with Coral Group is still some way off, company says

Ladbrokes said its planned merger with Coral Group is still some way off and that for now its main focus is on out-performing its rival UK betting-shop chain.

The deal, announced last month, needs to get past Britain's Competition and Markets Authority, and with the two companies controlling about 45 per cent of the UK's betting offices, analysts say the outcome remains in the balance. Initial talks have taken place with the regulator and Ladbrokes has a team of as many as 20 people working on the matter, chief executive Jim Mullen said by phone Tuesday.

“We are preparing the framework for what we need to do and a team has been ringfenced to look at that,” Mr Mullen said.

Ladbrokes and Coral are coming together to counter a tide of online competition, which has seen increasing numbers of gamblers shifting to the internet from conventional betting shops.

Reflecting the difficulties facing more traditional bookmakers, Ladbrokes reported a first-half loss Tuesday after writing down the value of its 2,169 betting offices. The results had been flagged in last month’s merger announcement. Ladbrokes shares fell 0.1 pence to 109.9 pence at 10.38am in London, and are little changed this year.

To gain regulatory clearance for the Coral merger, Ladbrokes needs to clear a hurdle that it failed to in 1998, the last time it sought to acquire its competitor. The shift in the industry since then may increase its chances, with online gaming having grown to become a mainstream alternative to visiting a betting shop. Together, Ladbrokes and Coral control about 14 per cent of the UK digital gambling market.

Increased marketing

For now, Mullen is focusing on regaining customers by plowing money into both traditional and non-traditional channels, while seeking to close underperforming shops. A planned increase in marketing spending means the Ladbrokes brand will become more prominent across the media, while the company will also sponsor more events to boost its profile. "There are signs of light, particularly in UK retail," Nick Batram, an analyst at Peel Hunt, said in a note. Changes that Mullen is introducing led to a pretax loss of £51.4 million (€72.66 million) in the six months through June 30th as the company took one-time charges of £78.9 million, mostly to reduce the value of betting shops in the UK and Ireland. Business in the first weeks of the second half has been in line with the company's expectations, Ladbrokes said.

Bloomberg