Ladbrokes and Coral ordered to sell 350 to 400 stores to complete merger

The UK’s Competition & Markets Authority (CMA) has decided that Ladbrokes and Coral need to sell around 350 to 400 stores in order to obtain clearance for their proposed merger.

In July 2015, Ladbrokes agreed to merge with Gala Coral Group Limited (Coral), creating a company called Ladbrokes Coral, with a market cap of around £2.3bn.

Ladbrokes and Coral are the second and third largest bookmakers in the UK by number of shops, known as licensed betting offices (LBOs). The two businesses also provide betting and gaming products online, ‘on-course’ at certain racecourses, and by telephone

Ladbrokes operates around 2,150 betting shops in Great Britain and 77 in Northern Ireland, whereas Coral operates around 1,850 betting shops. Combined, they both eclipse their nearest competitor William Hill, which only has 2,400 stores.

Following an investigation into the proposed merger, the CMA identified 642 local areas where the deal would result in a substantial lessening of competition.

Therefore, in a summary of the CMA’s final report, it has been determined that the loss of competition between Ladbrokes’ and Coral’s LBOs in local areas where choice will be reduced to only one or two LBOs may lead to a worsening of the businesses’ offer to customers.

To address these concerns and preserve competition for the benefit of customers in these local areas, Ladbrokes and Coral must sell around 350 to 400 betting shops to one or more suitably qualified up-front buyers, which must be approved by the CMA.

The sales must be completed before the merger can go ahead.

Martin Cave, Inquiry Chair, said: “We’ve found that the merger between 2 of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas.

“For these customers, competition comes from the choice of shops in their local area and they would lose out from any reduction of competition and choice. Discounts and offers of free bets to individual customers are 2 of the ways betting shops respond to local competition which could be threatened by the merger. Such a widespread reduction in competition at the local level could also worsen those elements that are set centrally, such as odds and betting limits.

“Although online betting has grown substantially in recent years, the evidence we’ve seen confirms that a significant proportion of customers still choose to bet in shops - and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers.

“We require Ladbrokes/Coral to sell around 350 to 400 betting shops to a suitable purchaser - or purchasers - in order to ensure that customers continue to benefit from competition in those local areas. It is now for the parties to propose a divestment package and one or more suitable purchasers for the CMA to approve.”

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