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Ladbrokes to merge with smaller rival Coral Ladbrokes to merge with smaller rival Coral
(34 minutes later)
Bookmakers Ladbrokes has announced it plans to merge with Gala Coral in a deal expected to value the business at £2.3bn.Bookmakers Ladbrokes has announced it plans to merge with Gala Coral in a deal expected to value the business at £2.3bn.
The move will take it past the current high street leader, William Hill, combining Ladbrokes' 2,100 shops with Coral's 1,845.The move will take it past the current high street leader, William Hill, combining Ladbrokes' 2,100 shops with Coral's 1,845.
Current Ladbrokes chief executive, Jim Mullen, will become boss of the merged company, named Ladbrokes Coral.Current Ladbrokes chief executive, Jim Mullen, will become boss of the merged company, named Ladbrokes Coral.
The two firms had announced merger talks last month.The two firms had announced merger talks last month.
Peter Erskine, chairman of Ladbrokes, hailed the merger as a "major strategic step for Ladbrokes".
He added: "Together, we will create a leading betting and gaming business. The transaction will provide an attractive opportunity to generate considerable value for both sets of shareholders."
To fund the deal Ladbrokes will offer 93 million new shares to investors, representing 10% of the company.To fund the deal Ladbrokes will offer 93 million new shares to investors, representing 10% of the company.
Ladbrokes will issue new ordinary shares to existing Coral shareholders representing 48.25% of the enlarged company. Gala Coral has been owned by a number of private equity firms, including Apollo Global Management, Cerberus Capital Management, Anchorage Capital Partners and Park Square Capital, since 2010, when it collapsed under £2.5bn of debt.
Existing Ladbrokes shareholders will then own 51.75% of the enlarged company. Under the terms of the deal, those private equity owners will own 48.25% of the new company's shares, with the remainder being held by Ladbrokes shareholders.
Ladbrokes' share price fell 0.78% to 127p following news of the deal.
Before the merger talks began, Gala Coral had appointed Morgan Stanley and Goldman Sachs to advise on a possible stock market debut, initially planned for October.
The deal comes just over a week after online bookmaker 888 Holdings won a takeover battle with GVC Holdings for rival Bwin.party in a cash and shares deal valued at about £898m.The deal comes just over a week after online bookmaker 888 Holdings won a takeover battle with GVC Holdings for rival Bwin.party in a cash and shares deal valued at about £898m.
The two companies had been in discussions since the middle of May.
Peter Erskine, chairman of Ladbrokes, hailed the merger as a "major strategic step for Ladbrokes".
He added: "Together, we will create a leading betting and gaming business. The transaction will provide an attractive opportunity to generate considerable value for both sets of shareholders, through significant operating synergies and a strong cash flow profile."