The UK’s biggest High Street bookmaker, Ladbrokes Coral is in detailed talks over a takeover bid by rival online gambling company GVC. GVC have put forward a possible offer for consideration, which could see the Ladbrokes Coral Group valued at up to £3.9 billion.

This is the third time this year that merger talks have been on the table. Previous takeover discussions were put on hold, pending the government review of fixed-odds betting terminals (FOBT), which could impact the value of the company.

The review into FOBTs by the UK Department for Culture, Media and Sport recommended reducing the current maximum stake from £1000 to between £50 and £2. The final decision will be announced next month, and the outcome will have a direct impact on the profitability of Ladbrokes Coral.

Yet in an innovative move, the new takeover proposal takes into account the impact the decision on the value of the company. GVC’s proposed offer values the company at £3.1 billion. Yet if the outcome of the FOBT review is favourable for the gambling industry, GVC will pay a contingent value right (CVR) of up to 42.8p per share. If the government opts for the higher end of the maximum bet limit of a £50 stake, this would boost the takeover deal to the maximum of £3.9bn.

Ladbrokes has a rich history, with its origins dating back to 1886. The company boomed during the 1960’s following the legalisation of betting shops. Ladbrokes completed a merger with Gala Coral last year which saw them become one of the UK’s biggest gambling firms with the largest number of High Street betting shops.

GVC is a fast-growing internet sports betting and gaming group based in the Isle of Man. They boast a number of leading gambling brands including Foxy Bingo, partycasino and bwin. GVC Holdings won the EGR award for Casino Operator of the Year 2017 for their strong performance in the casino sector. The merger would see current Ladbrokes CEO Jim Mullens make way for GVC’s chief executive, Kenneth Alexander.

A takeover would lead to significant development of Ladbrokes’ online business. When you check the slots selection from Ladbrokes along with games such as roulette and blackjack, they provide a rich and diverse online casino product in addition to their sports betting business. Yet the merger is likely to mean further enhancements of the online sector of the company. Alexander stated, “We have our own proprietary technology and we’ll be using that as the platform of choice for the group.”

If the takeover bid is successful, the combined company will solidify its position as one of the biggest retail and online gambling groups in the world. They will also be listed on the FTSE100, with a market capitalisation of around £5.3bn.

GVC has until 4th January to decide whether to make a firm takeover bid, or whether to withdraw. So, watch this space!