Ladbrokes Coral's board has confirmed that it is in talks on a possible takeover by GVC Holdings. Under the terms of the possible offer, Ladbrokes Coral shareholders would be entitled to 32.7p in cash and 0.141 ordinary GVC shares for each Ladbrokes Coral share, and a potential further value of up to 42.8p structured as a contingent value right (CVR). The value of the CVR, which would be satisfied by the issue of loan notes by GVC, would be determined by reference to the outcome of the Department of Digital, Culture, Media and Sport's current 'review of gaming machines and social responsibility measures' relating to the regulation of category B2 fixed-odds betting terminals and its estimated impact on the run-rate profitability of Ladbrokes Coral's UK business, after giving effect to any mitigations. Based on the respective Ladbrokes Coral and GVC share prices as at the close of business on 6 Dec, the possible offer values Ladbrokes Coral at 160.9p per Ladbrokes Coral share, equating to a total equity value of c.£3.1bn, plus a CVR of up to 42.8p per Ladbrokes Coral share, equating to a total equity value of up to c.£3.9bn (including the maximum CVR). The two boards said it was expected that the proposed offer would include a mix and match facility allowing Ladbrokes Coral shareholders the opportunity to elect to receive more cash or more new ordinary shares in GVC, subject to offsetting elections made by other Ladbrokes Coral shareholders, as the case may be. The CVR would not be included in the mix and match facility. It is anticipated that Ladbrokes Coral shareholders would hold c.46.5% and GVC shareholders would hold c.53.5% of the issued and to be issued share capital of the enlarged group.
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