Mergers and Acquisitions in the News — Weekly Round-up for December 29, 2017

By Brian Cullingworth, Last updated Dec 29, 2017

Tatts And Tabcorp Now Officially One

Merger implemented from December 22, and Tatts chairman joins the Tabcorp board

Tabcorp Holdings Limited advises that the Scheme of Arrangement in relation to the combination of Tabcorp and Tatts Group Limited has been implemented today (Friday 22 December).

Tatts is now a wholly-owned subsidiary of Tabcorp.

Tabcorp additionally announced the appointment of Harry Boon as a non-executive director of Tabcorp following the merger with Tatts and in compliance with prior agreements. Boon was the chairman of Tatts until implementation of the merger, having served as a director since 2005.

He is currently the chairman of Asaleo Care Limited and formerly a director of Toll Holdings Limited from 2006 to 2015. Boon was previously CEO and managing director of ASX listed company, Ansell Limited, until he retired in 2004, a position which capped a career spanning some 28 years with the Ansell Group.

He has held senior positions in Australia, Europe, the US and Canada, and has broad-based experience in global marketing and sales, manufacturing, and product development.

Tabcorp chairman, Paula Dwyer, welcomed the appointment, saying: “Harry brings his significant Board experience to Tabcorp including his deep insight into Tatts, which he has led as chairman since 2006. Harry’s ongoing involvement as a director of Tabcorp will be valuable as we progress the integration of the combination.”

Ladbrokes Coral And GVC Seal Acquisition Deal (Update)

Companies announce agreement in GBP 4 billion deal

The GVC Holdings acquisition of Ladbrokes Coral is on, according to UK media reports early Friday, which advise that GVC has agreed to buy its rival for GBP 4 billion.

The online gambling group, which owns brands such as Bwin, Sportingbet, PartyPoker and Foxy Bingo, confirmed it is to pay 32.7 pence in cash and 0.141 new GVC shares for each Ladbrokes share.

The final price GVC pays depends on the outcome of a UK government review into fixed-odds betting terminals (FOBTs), which are money spinners for companies such as Ladbrokes’ retail division but have come under fire from anti-gambling activists.

Following a review, the UK government said in October that the maximum stake allowed on FOBTs could be slashed over concerns they fuel addiction. It started a 12-week consultation to consider cutting the stake to between GBP 50 and GBP 2, from GBP 100 currently (see previous InfoPowa reports).

GVC’s offer values Ladbrokes Coral at 164.4 pence per share, equating to a total equity value of around GBP 3.2 billion, plus a contingent fee of up to 42.8 pence a share, meaning the bookmaker could be valued at about GBP 4 billion.

GVC announced this month it was in talks with Ladbrokes about a possible cash-and-shares takeover.

The merged company is expected to be big enough to enter the UK’s FTSE 100 index.

The deal is expected to close late in the first or early in the second quarter of 2018, GVC said.

Bloomberg reported that Ladbrokes investors could receive as much as 207.2 pence for every Ladbrokes share – 19 percent higher than Thursday’s closing price.

The merger would follow previous major mergers like that of Paddy Power and Betfair as well as Ladbrokes with Coral.

Cherry Group Uses Option To Acquire Remaining Available Shares In Gaming Lounge

Affiliate management firm becomes an almost wholly owned subsidiary of Cherry Group

The Cherry gambling group has revealed that it has decided to exercise its option to acquire up to 100 percent of the shares in the affiliate company Game Lounge Ltd.

The purchase price for an additional 44 percent of the shares is based on a multiple of 4.5 times the 2017 profit of the affiliate operation and 6 times the 2017 profit of the white label operation. The acquisition is expected to be financed through a combination of cash and a new issue of shares in Cherry AB.

In January 2015, Cherry AB’s wholly-owned subsidiary, Cherry Malta Ltd, acquired a controlling 51 percent of the shares in Game Lounge Ltd (see previous InfoPowa reports).

In the period in which it has been a member of the Cherry Group, Game Lounge has reportedly enjoyed strong and stable development, motivating Cherry to acquire 44 percent of the shares outstanding.

Following the acquisition, Cherry will hold a total of 95 percent of the shares in Game Lounge Ltd. The remaining shares will be held by the founders of Game Lounge, who will also stay on as the company’s head of sales and CEO, respectively.

The purchase price for the 44 percent of the shares of Game Lounge will be financed in equal parts through the company’s cash and a new issue of shares in Cherry AB. The cash portion is to be disbursed before 30 April 2018 and the new issue must be settled by the Cherry AB Annual General Meeting in May 2018, after which the transaction is expected to be closed.

Anders Holmgren, CEO of Cherry, said:

“Game Lounge holds a strong position in a growing market. In the third quarter 2017, Game Lounge continued to grow, and revenue amounted to SEK 45 million, an increase of 180 percent compared with Q3-2016. EBITDA margin amounted to 75 percent (37). Game Lounge’s business model is remarkably scalable, the company has unique capabilities in search-engine optimization (SEO) and is the recognized standard in affiliation within the gaming industry and we see great potential to expand the scope of the business to also include other segments, such as the loan affiliate website Lainat.fi, acquired by Game Lounge in November.”

GVC Acquisition Of Ladbrokes Coral A New Challenge For Hornby?

Claims that former banker will become chief operating officer of the combined groups

It appears from an article in The Times on Saturday that former banker and Ladbrokes Coral chief operating officer Andy Hornby (50) will be appointed the chief operating officer of the combined GVC Holdings and Ladbrokes Coral group, responsible for all retail betting in the UK and Europe and all digital marketing.

The merger is expected to complete in the second quarter of 2018, giving Hornby wide responsibilities, although he will not be made a director, according to The Times, in acknowledgement of the controversy associated with his earlier career as a banker.

The same applied with his service at Ladbrokes Coral, where despite having major authority as COO, he was not appointed to the Board – it has been speculated in deference to sensitivities that linger from his less than stellar and much criticised performance as the 39-year-old chief executive of HBOS bank, which had to be rescued ten years ago as the global financial crisis took hold.

Hornby’s past has inevitably resurfaced on the news of his likely new appointment, and InfoPowa readers may recall that following the HBOS debacle – a scandal that is reportedly still the subject of a regulatory investigation – he eventually ended up in mid-2011 as the Coral betting group’s chief executive.

When Coral and Ladbrokes merged in a GBP 2.3 billion agreement last year Hornby became chief operating officer of the combined companies, overseeing the retail and digital arms which make up 85 percent of revenues.

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