Ladbrokes PLC (LON:LAD), a gaming and betting provider, today had to defend the rationale for the proposed merger with the Coral Group, following stark criticism from one of Ladbrokes’ shareholders – Dermot Desmond.
Mr Desmond has published an open letter slamming the proposed deal and simply calling it “bad”. His arguments include what has already become a famous phrase in various media sources: “giving away half your company and taking on over £800m of debt is a very expensive way to recruit a quality management team.”
His other arguments on the website called www.saynotocoral.com concern the cut in dividends to Ladbrokes’ shareholders, the debt the company will incur, as well as alleged increase in dependance on Playtech PLC (LON:PTEC) as a key technology supplier. Perhaps it is useful to note here that Playtech will receive £75 million in case the deal closes.
In today’s announcement, Ladbrokes’ directors reiterated their recommendation to shareholders to vote in favour of the Resolutions to be proposed at the General Meeting to be held on 24 November 2015.
Ladbrokes’ statement notes that key benefits of a deal with Coral are:
- The potential to deliver faster online growth;
- The creation of the UK’s largest LBO estate;
- The creation of an extensive international portfolio of regulated businesses;
- The delivery of significant cost synergies underpinning shareholder returns;
- The ability to operate across an enhanced and integrated technology platform.
To view the official announcement from Ladbrokes, click here.