Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Irish billionaire Desmond urges Ladbrokes shareholders to reject Coral merger

Published 18/11/2015, 14:39
© Reuters.  Irish billionaire Desmond urges Ladbrokes shareholders to reject Coral merger
LCL
-

DUBLIN (Reuters) - Irish billionaire Dermot Desmond has written to fellow shareholders in British bookmaker Ladbrokes (L:LAD) to urge them to reject a proposed merger with rival Gala Coral at a shareholders meeting next Tuesday.

The two bookmakers agreed an all-share merger in July, creating a 2.3 billion pound betting group that would seek to build on its dominance of Britain's high streets to expand its online business.

In a letter to shareholders Desmond, majority shareholder in Scottish football club Celtic, said Ladbrokes needs a new management team to shift more of its customers online, but said a merger was not the right way to achieve this.

"Giving away half your company and taking on over 800 million pounds of debt is a very expensive way to recruit a quality management team," Desmond said in the letter. "The real winners in this transaction are the Coral shareholders."

Ladbrokes promoted Jim Mullen, the head of its digital business, to the chief executive's role in March, reflecting the need to compete harder in the expanding online market.

In the letter, Desmond says that Ladbrokes shareholders would suffer a 66 percent reduction in dividends and says a merger with Coral would not provide it with the proprietary technology platform he believes it needs.

He said he believes synergies will be difficult to deliver as Coral and Ladbrokes would maintain separate brands and two trading teams.

Ladbrokes was down 0.4 percent on Wednesday at 1.09 British pounds per share at 1415 GMT compared with 1.24 pounds when the deal was announced on July 24.

A spokesman for Desmond said that he had a "substantial shareholding" in Ladbrokes. A Ladbrokes spokesman said Desmond appeared to hold at least 1 percent but possibly double that.

Ladbrokes said in a statement that it was not surprised by Desmond's views, but remained "confident that shareholders see the attraction of the proposed deal."

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.