The betting industry is like most industries in that a huge number of mergers, acquisitions and sales will occur each year. What you will often find is that unless you are looking for it, like we are for this article, the majority of Joe Public won’t even know that any of these transactions have taken place.
They can include a number of different avenues as well. One of the more common is bookmakers buying out rival high street betting shops and re-branding as their own. Another area that has been much more common over the last decade or so is mergers, with two or more brands coming together to make one larger brand.
Whatever the transaction that occurs, these days the deals are often worth millions, if not billions of pounds and whilst they don’t affect the punters all that much directly, they are usually aimed at a way that both brands can improve their already successful business.
Below we have listed some of the higher profile mergers, acquisitions and sales that have taken place within the betting industry.
Bet365 sale to Coral – 2005
Many people will already be familiar with the bet365 brand. But, there will likely be a good number of you who were unaware that bet365 actually owned a fleet of stores before moving online. The bookmaker’s stores were run by Peter Coates before the bet365 brand was born in 2000.
His empire was that of around 50 betting shops at its prime and was part of a successful business portfolio that Coates had worked up. But, as his daughter Denise came on board in the early 1990’s, she quickly realised that it was online betting that was going to be real money maker in the industry and decided that the brand for the business would then turn to bet365 in 2000, initially running alongside the high street stores.
But, as the online market continued to grow and the success of bet365 rocketed, a decision in 2005 to sell the remaining stores to Coral in a deal worth £40million was finalised. This not only made bet365 an exclusively online bookmaker, but also meant they could clear their debts with RBS who initially fronted the money to create their online empire.
Tote sale to Betfred – June 2011
Whilst many of the mergers, sales and acquisitions we have mentioned above will largely have gone unnoticed to most, the sale of the Tote to Betfred was one of the highest profile sales within the betting industries history. The reason behind is not the figures that were involved, although £265million is nothing to be sniffed at, but more the process that took place.
The Tote had been government run and owned since they opened their doors in 1928 under the then Prime Minister Winston Churchill. The concept of the Tote was like no other in that they offered pool betting, rather than your more traditional bookmaking style we see today.
The government had been trying to offload the Tote for a number of years now in a sale to privatise is, but as governments came and went, deals would often fall through. It wasn’t until 2011 under a coalition government was the process really kick started, but unlike most acquisitions, the government decided to run a bidding process that initially included 18 bidders.
This shortlist was then reduced to 5, before Betfred finally got the nod with a £265million bid. As the company was government run, this meant that an allocation of who got what needed to be decided, with the following breakdown:
- After deductions including debt and pensions, £180million was to be paid to the Government by Betfred
- The taxpayer would get £90million
- Racing would receive £90million
- Betfred also commit to paying £11million initially to racing, then £9million per year for the next 6 years (up until 2018)
BetVictor sale to Star Sport – June 2015
BetVictor have been a huge presence in the online sector for a number of years now. They’ve also enjoyed some success on the high street as well, albeit under their original name of Victor Chandler. But, the online sector has been where the company have been able to flourish.
It may have come as a surprise to many to hear that BetVictor still had a high street presence, albeit very small in comparison. Whilst they didn’t own shops as such, they still owned some very lucrative betting stalls throughout racecourses such as Ascot, Cheltenham and Goodwood, along with stalls at Lords Cricket Ground and The Oval.
In June 2015 it was announced that BetVictor were to sever these ties altogether and agreed an undisclosed fee with Star Sports to sell these reaming stalls. Star Sports already has a large presence in the south of the UK, especially Brighton, so it the auction is thought to be of a particularly large importance for the independent bookmaker. As far as BetVictor go, they will now be fully concentrating with online betting moving forward.
GVC buy out Bwin – September 2015
GVC, the company who own SportingBet managed to secure a 5 month fight to buy out that of bookmaker Bwin. The deal is said to have cost GVC a total of £1.1billion and managed to fight off a huge battel with 888 Holdings for the coup.
But, in what is a little confusing, the deal is actually a reverse takeover, so Bwin shareholders will actually own two-thirds of the combined group. The deal was able to be completed thanks to investment from private equity group, Cerabus for £400million, but did report that they had over £150million in shares already fully subscribed.
Major Bookmaker Deals & Mergers
|Bookmakers Involved||Year||Reported Deal Value|
|Bet365 retail shops sold to Coral||2005||£40Million|
|Tote sold to Betfred||June 2011||£265Million|
|BetVictor sold to Star Sports||June 2015||Undisclosed|
|Bwin sold to GVC||September 2015||£1.1Billion|
|Paddy Power/Betfair Merge||February 2016||£5Billion|
|Labrokes/Coral Merge||November 2016||£2.3Billion|
|Ladbrokes & Coral stores sold to Betfred||November 2016||£55Million|
|Ladbrokes Coral Group sold to GVC||March 2018||£3.2Billion|
Paddy Power/ Betfair merger – February 2016
The merger between two of the industry’s biggest bookmakers was completed in February 2016, in a deal worth a reported £5billion. The two companies have been able to combine the high street presence of Paddy Power, with over 550 betting across the UK and Ireland, with Betfair’s online presence as the largest betting exchange in the world.
The deal was said to be completed with a 52% shareholder for Paddy Power and 48% for Betfair. Included was a £80million bonus to be shared amongst senior partners at Paddy Power. The merger thus confirmed that Paddy Power Betfair, as they are now known, would become the biggest bookmaker in terms of size and revenue, with a reported value of around £8billion and a 2016 revenue figure of £1.5billion.
But, as part of cost cutting within the merger, it was announced that 650 jobs between the two firms would be lost in an effort to save around £50million a year in labour costs.
Coral / Ladbrokes merger – November 2016
The merger between Coral and Ladbrokes is one of the biggest in the history of the industry. The deal had been one that was on the table for some time and several years to complete, before a fee of £2.3billion was announced. As Coral were essentially bailing struggling Ladbrokes out, a £50million win fall fell to senior staff within Coral as a sweetener in the deal.
As both companies still had strong presences on the high street, it meant that the group were now able to entertain over 4,000 betting shops. But, this was later adjusted by the Competition and Marketing Authority, as you can see from the next section of this article.
Nonetheless, the group are now considered to be one of the biggest in the industry again, with over 30,000 employees and a player base that is worldwide.
Sale of Coral and Ladbrokes stores to Betfred and Stan James – November 2016
The merger of Coral and Ladbrokes had a bit of knock-on affect throughout the industry. The issue was that the Competition and Marketing authority had deemed that as the merger would leave them with 4,000 high street betting shops throughout the UK, it would give them an unfair advantage over the competition. Given that there are only around 9,000 betting shops in total, an almost 50% coverage from just one brand wouldn’t have been fair on the competition.
So, they were forced to sell around 10% of their stores, reaching a number of 359 in order to meet the guidelines set out by the Competition and Marketing Authority. 322 of the stores were sold on to Betfred for £55million in cash, whilst the remaining 37 were sold to Stan James. The latter was a little odd, given that Stan James were predominantly an online bookmaker these days, with some unconfirmed reports claiming they would hold the properties in order to sell them on for profit at a later date.
The money that was brought in from the sales was used to clear some of the debts racked up between the two companies. Ladbrokes had to part with 185 stores whilst Coral parted with 174 stores.
GVC purchase of Ladbrokes Coral Group – March 2018
Whilst Ladbrokes Coral only completed their £2.3billion merger in November 2016, barely 12 months later the company were subjective of another takeover bid. This time the bid came in the form of GVC Holdings.
It is reported that numerous negotiations took place between the two parties after various bids had been rejected, with the valuation of the Ladbrokes Coral Group being made trickier following the announcement of the review into the Fixed Odds Betting Terminals (FOBT) maximum stakes.
It is believed that a deal was agreed which relied largely on the outcome of the governments FOBT review. It has been reported that the deal would have risen to £4billion if the maximum stakes were reduced to £50, however following the announcement that FOBT stakes are to be slashed to just £2 in April 2019, it is thought that the value of the deal decreased significantly, to a figure of £3.2billion.
The Acquisition of the Ladbrokes Coral Group has meant that GVC Holdings have added to their already substantial portfolio of brands which include the likes of Bwin and Sportingbet as well as Partypoker, PartyCasino, Foxy Bingo and Gala to make them one of the world’s largest listed sport’s betting and gaming groups who generates revenues of over £3billion annually.
Deals That Didn’t Happen
As the trend of mergers and acquisitions continues to rise in the betting industry, there are a number of deals that have been tabled that have failed to go through.
888 and William Hill – August 2016
A deal between 888 and William Hill has been one that’s been on the tables for a number of years now. Rank Holdings, who owns the 888 brand, initially tried to table a deal to William Hill that would give shareholders 339p per share, before increasing that further to 352p per share in a deal said to be worth in excess of £3billion.
But, the offer that has been on the table for some time from Rank has been flat rejected by William Hill, who state that they massively undervalue the company. The current proposal would actually give William Hill shareholders 48.8% of the combined group, which is another thing that didn’t sit too well, even though this number has increased from the initial offer of 44.6%.
What’s quite ironic in the whole situation is that only 12 months prior, William Hill tried to acquire 888 from the Rank group, with an offer of £700million. This was rejected as Rank claimed the price wasn’t high enough, but it does highlight that both companies are looking to strike some form of deal, whether that can be done remains to be seen.