Home news The gambler behind GVC bid for Ladbrokes Coral

The gambler behind GVC bid for Ladbrokes Coral


Kenny Alexander, the chief executive of gaming firm GVC Holdings, is known to like a flutter.

He proved it again today when the company he heads – which owns brands including Foxy Bingo, Sportingbet, CasinoClub, Cashcade and Party Poker – tabled a bid for Ladbrokes Coral.

Scotsman Mr Alexander has already tried twice during the last year to snare Ladbrokes Coral. He is clearly hoping that this will be a case of third time lucky.
What is unusual about the timing of today’s announcement is that, while GVC had always been expected to have another tilt at Ladbrokes, the assumption was that it would wait until the Government had completed its review of Fixed Odds Betting Terminals (FOBTs) – the lucrative but highly controversial gaming machines that sit in every high street bookmaker.
:: Ladbrokes Coral in talks on takeover by GVC
The review is likely to impose a lower maximum stake per spin on the machines which, depending on how low the figure is, is likely to take a chunk out of the profits of bookmakers.
Accordingly, GVC could have been forgiven for waiting a while to see what the Department for Culture, Media and Sport came up with, not least because confusion over the issue has clouded previous negotiations over how to value Ladbrokes.
GVC’s solution has been to come up with a clever formula under which the eventual sum it pays will depend on the outcome of the review and values Ladbrokes at anywhere between £3.1bn and £3.9bn. The combined business is expected to be worth some £5.7bn and would qualify for membership of the FTSE 100.
Yet only as recently as September, Mr Alexander – who has taken GVC from being an Aim-listed minnow to a £2.75bn member of the FTSE 250 in a decade – was insisting he would “definitely…not be doing anything before the outcome of the review”.
What will startle casual observers is the way in which GVC, a 13-year old business few outside the City will have heard of, is in a position to snaffle an established company boasting two of the best-known names in the industry.
Joe Coral, after all, launched his bookmaking business 91 years ago while Ladbrokes dates back even further, to 1886.
That reflects dramatic changes in the gaming industry, in particular the explosive growth of online betting, but also the rapid growth of GVC itself via a series of mergers and acquisitions.
Founded in 2004, as Luxembourg-based Gaming VC Holdings, its meteoric growth began when, in March 2007, Kilmarnock-supporting Mr Alexander – who will head the combined GVC and Ladbrokes – became chief executive.
After a string of smaller deals, the first big one came when, in 2013, GVC teamed up with William Hill to buy the online sports betting business Sportingbet. Then, in 2015, it outbid rival 888 Holdings to pay £1.1bn for Bwin.Party, a fallen star of the gaming sector formed from the merger of the former Real Madrid shirt sponsor Bwin and the former FTSE 100 member PartyGaming.
This was the boldest roll of the dice yet for Mr Alexander as, at the time, Bwin.Party was more than twice the size of GVC.

Again, as with Sportingbet, he and his colleagues proved adept at successfully integrating another business.
But Ladbrokes Coral, even at the lower end of the price range being mooted, is a much bigger beast than anything GVC has previously taken on and, like Bwin.Party, it is larger than GVC itself.
Moreover, unlike Sportingbet and Bwin.Party, it is not a purely digital business but one boasting physical assets in the form of 3,700 high street betting shops.
Mr Alexander has, in the recent past, made clear his preference for acquiring online gaming businesses ahead of ones owning bookmaking shops because the former tend to be more highly valued by investors than the latter.
By contrast, he was today talking about how the “enlarged group would be an online-led globally positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy”.
Aside from Mr Alexander’s apparent conversion to the joys of high street betting shops, this deal raises several questions.
It would be interesting to know, for example, what Fred Done, the pugnacious chairman and co-founder of Betfred, makes of this proposed deal.
Betfred signed a 10-year licencing deal with GVC as recently as May last year under which the latter agreed to provide the Warrington-based bookmaker with an e-gaming platform.
Another is whether this deal fires the starting pistol on another round of consolidation in the betting industry.
Betfair has already joined forces with Paddy Power but the likes of 888 Holdings, William Hill, Jackpotjoy and Canadian firm Stars Group, owner of the PokerStars website, are all expected to participate in further tie-ups.
So too could Mecca bingo and Grosvenor casino operator Rank and SkyBet, in which Sky plc, the parent of Sky News, has a minority shareholding.

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At least as intriguing is how Bet365 – along with GVC and Paddy Power Betfair, one of the three biggest global players in online sports betting – reacts to all this.
And the biggest question of all is whether the DCMS could yet disrupt the industrial logic of this deal by confounding everyone with its review of FOBTs.

Source: SKY