Divestment of 359 licensed betting offices confirmed
Ladbrokes and Coral announced over the weekend that they have agreed to sell a total of 359 retail betting shops to Done Brothers (Cash Betting) Limited (trading as Betfred) and StanJames (Abingdon) Limited (trading as Stan James).
Betfred will purchase 322 shops for a cash consideration of £55 million and Stan James will purchase 37 shops for a cash consideration of £500,000.
The exchange of contracts is conditional upon the approval of the Competition and Markets Authority (CMA), and the completion of the merger of Ladbrokes plc and the Coral Group.
The combined consideration of £55.5 million for the sale of the 359 shops is payable in proportion to the profitability of the shops. It is intended that the consideration received will be used to repay debt.
The shops generated fully costed EBITDA (including an estimated allocation of retail back office costs) of £16.8 million in the year to , resulting in an EBITDA consideration multiple of 3.3x.
The disposal will be slightly dilutive to both Ladbrokes and the enlarged group's earnings, the statement announcing the deal advised.
The sale of the betting shops is a condition of the CMA's approval of the Coral-Ladbrokes merger; In July this year the CMA said the merger could go ahead subject to the divestment of 350 to 400 shops, and that completion of the Merger could occur when the shop divestment process was substantially complete.
The CMA will now decide if it will approve the merger upon the exchange of contracts, subject to the CMA's approval, for the sale of 322 shops to Betfred and 37 shops to Stan James. Once approval has been received, the parties will seek the CMA's consent to complete the Merger subject to the divestiture of one remaining shop.
Following receipt of this approval, Ladbrokes will publish a prospectus in relation to the readmission of the enlarged group to the premium listing segment of the Financial Conduct Authority's Official List and to trading on the London Stock Exchange. It is expected that completion of the Merger will take place in the near future.
Commenting on the sale Jim Mullen, Chief Executive of Ladbrokes said:
"The sale of these shops will clear the last significant hurdle to delivering on the merger with Coral and paves the way for our focus on completion and quickly delivering on the opportunities the merger offers."
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