December 21, 2017 / 6:49 PM / in 10 months

British gambling firm GVC nears takeover of Ladbrokes Coral - sources

LONDON (Reuters) - Online gambling firm GVC (GVC.L) is nearing a deal to acquire British bookmaker Ladbrokes Coral LCL.L for as much as 3.9 billion pounds ($5.2 billion) and could announce it as soon as Friday, two sources familiar with the matter said.

GVC, the owner of the Sportingbet, Bwin and Foxy Bingo brands, and betting shop operator Ladbrokes Coral disclosed on Dec. 7 that they were in “detailed discussions” about a possible cash-and-shares takeover, which would create a gambling giant that is expected to be big enough to enter the UK’s FTSE 100 index.

GVC, which is led by Kenny Alexander who would also take charge of the combined group, has until Jan. 4 to either make a firm offer for the bookmaker or walk away from a deal, under rules laid down by Britain’s Takeover Panel.

However, the two companies are close to agreeing final terms, the sources said on Thursday, and the pair aim to announce a formal offer on Friday, although the timing could be subject to change.

Spokesmen for GVC and Ladbrokes Coral, which are both FTSE 250 companies, declined to comment.

The British gambling industry has been transformed by a series of deals in recent years as companies seek to combine forces to contend with tougher regulations and higher taxes. In 2015 alone, 130-year-old Ladbrokes agreed to merge with rival Coral, Paddy Power merged with Betfair and GVC bought Bwin.Party.

In October the British government added to the pressures on firms with betting shops by announcing it would slash the maximum stake allowed on fixed odds betting terminals (FOBTs), controversial machines which critics say fuel gambling addictions due to the pace at which significant sums of money can be lost.

The government proposed cutting maximum FOBT stakes from 100 pounds to between 50 pounds and 2 pounds and launched a 12-week consultation to review its options.

GVC and Ladbrokes Coral said earlier this month that they had devised a deal structure that would allow for the different possible outcomes of the FOBT review.

It would see GVC offer Ladbrokes Coral shareholders a so-called contingent value right (CVR), as well as cash and stock. The value of the CVR will vary depending on the outcome of the FOBT consultation, meaning the deal will give Ladbrokes Coral a total equity value of between 3.1 billion pounds and 3.9 billion pounds.

The sources said the structure of the deal had not changed from the terms outlined on Dec. 7.

($1 = 0.7477 pounds)

Reporting by Ben Martin; Editing by Greg Mahlich

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