Ladbrokes-Gala Coral deal clearance may depend on shop sales
Bookmakers Ladbrokes and Gala Coral might need to shed numerous shops if their proposed merger is to proceed, the competition watchdog has said.
The Competition and Markets Authority said a merger of the UK's second and 3rd biggest bookies may restrict competition on the High Street.
About 350 to 400 stores might have to be sold "for the merger to be conditionally cleared", the CMA stated.
The CMA has given up until 13 June for actions to its provisional findings.
Ladbrokes runs 2,154 wagering shops in Great Britain and 77 in Northern Ireland, while Gala Coral runs about 1,850 wagering shops in Great Britain.
The combined group would make it bigger than present market leader William Hill.
Martin Cave, who is chairing the CMA's query, stated: "We've provisionally discovered that the merger between two of the largest bookies in the country might be anticipated to decrease competition and choice for clients in a large number of areas.
"Although online betting has actually grown considerably in recent years, the proof we've seen validates that a big number of clients still choose to bet in shops - and many would continue to do so after the merger.
"For these consumers, competition comes from the option of stores in their local area and it's they who might lose out from any reduction of competitors and option."
The CMA said it was aiming to release its final report by the end of July.
Ladbrokes said: "This is a substantial step and our focus now will be on agreeing the store disposals to please the CMA." Ladbrokes shares had actually jumped 6.5% by the close of trade on Friday.
Gala Coral stated it noted that the CMA was "provisionally minded to clear the proposed merger" which it would continue to work with the regulator on methods to achieve final clearance.
Analysis: Frank Keogh, BBC Sport racing reporter:
the yohaig code face of Britain's betting shops has actually changed in the last twenty years - from smoky boltholes with horse racing controling proceedings to glossy multi-screen sport outlets where fixed-odds wagering terminals are a huge earner.
While critics say the casino-style machines have motivated issue gamblers, the bookmakers firmly insist personnel are trained to keep an eye out for concerns.
The bottom line is the rise of the devices has actually assisted keep a number of these stores open in a modern-day betting world where online betting has actually mushroomed.
And while some stores look destined to be casualties, this promotion code proposed ₤ 2.3 bn merger reveals there is a lot of money still to be made in the British wagering market.
Analysts state the merged business will still have a dominant position even if lots of stores have actually to be sold.
"We anticipate considerable cost conserving will be possible due to the fact that there will be large areas of overlap and unnecessary duplication of functions throughout the combined company," stated Steve Clayton, head of equity research at Hargreaves Lansdown.
Ladbrokes concurred the terms of a ₤ 2.3 bn all-share merger with Coral in July, and the business's investors backed the deal in November.
Ladbrokes revenues struck by writedowns
11 August 2015
