Shares in bookmaker Ladbrokes (LAD) surge 10.5% to 132p after the UK’s competition watchdog suggests its merger with rival Gala Coral will receive the green light if the groups sell 350 to 400 betting shops.
The Competition and Markets Authority says the deal could give rise to competition concerns because the two companies' store estates would exceed that of market leader William Hill (WMH).
The findings are provisional ahead of a final report in July but the market is breathing a collective sigh of relief on news the remedies are in line with analysts’ original predictions.
We’ve been fans of the deal since it was announced last summer, as it will create the UK’s largest retail betting estate and boost Ladbrokes’ online presence.
Ladbrokes has lagged its competitors in the online sphere, but Coral’s digital business has been very successful. Coral’s online net revenue rose by 36% in the year to September 2015.
Earnings per share are expected to be boosted by more than 80% if the merger completes, and shareholders can also look forward to an estimated dividend yield of 6.6% in 2017, according to Investec.
The sale of 400 betting shops for an estimated £150 million would offset the deal costs of £143.6 million.
