From the Blue Index blog

Dont bet on Ladbrokes
May 15th, 2009

Shares in bookmaker Ladbrokes (LAD) were looking like a good recovery play up to this morning, having regained over 50% of their value after the October low of 133p last year

But this morning, Ladbrokes reported a 34% slump in profits for the first four months of 2009. Profits from big spending high rollers tumbled to just GBP25m from GBP40m in 2008, with punters enjoying a particularly good Cheltenham Festival in March. These abnormal gross win margin levels, increased free bets and unfavourable cost phasing in eGaming against the previous year resulted in the profits slump, although CEO Chris Bell was at pains to point out the rate of decline is not representative of our expectations for the year, and he said the decline has already given way to more normal trends in May. And overall, added Chris Bell, the general resilience of the business and strong cost controls gives us confidence in the outturn for the full year.

But brokers Noble, Shore Capital and Daniel Stewart all see the results as disappointing and weaker than expected, particularly given that results at rival William Hill are strong and in stark contrast

Full transcript here
http://blog.blueindex.co.uk/2009/05/dont-bet-on-ladbrokes/

I'll take any spike that's going tomorrow :0)

I'm with PG, don't like the look of the other 2.
2517

Still waiting :0)

Feb 27:
Canaccord: Hold - TP: 115p
Barclays: Equal Weight - TP: 122p
Deutsche Bank; Hold - TP: 112p
JP Morgan: Undewrweight - TP: 110p

sold small profit @ 1 1 8

StockMarketWire.com
Bookmaker Ladbrokes reports improved operating metrics in the three months to the end of March. But it says results have favoured customers and profits are materially down.

Ladbrokes says group net revenues rose by 3.3% in the period but EBIT fell to £14.3m - down from £35.6m in the previous three months and down from £18.4m a year ago.

Chief executive Jim Mullen said: "In Q1 many of our customer metrics are encouraging but results have favoured customers and profits are materially down.

"These results demonstrate the challenges we continue to face. We need to change the way we run the business, build scale, primarily in Digital and respond faster to the customer and changes in the market place.

"I will complete my review of the wider business quickly and I will present some of the principal changes that I intend to make, in June, earlier than planned.

"Shareholders should expect me to focus on how we will build an effective competitive position, develop scale and resilience over the medium-term.

"I believe strongly in Ladbrokes. We have laid solid operational foundations but there is still a lot to be done. The decision to seek examinership in Ireland demonstrates the seriousness of our intent and the speed with which we will execute."

Exane BNP Paribas reiterates outperform on Ladbrokes, target raised from 120p to 125p

Still going against the trend only this time it's upwards.
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Statement regarding potential merger of Ladbrokes plc and Coral Group
In response to recent press speculation, Ladbrokes plc ("Ladbrokes") confirms that it is in discussions with the board of Gala Coral Group Limited ("Gala Coral") regarding a possible merger of Ladbrokes and Coral Retail, Eurobet Retail and Gala Coral's Online businesses ("Coral Group"), to create an enlarged business (the "Combined Entity") which would be listed on the official list of the UK Listing Authority (the "Official List") and traded on the main market of the London Stock Exchange.

Shareholders are advised that there can be no certainty that the discussions between Ladbrokes and Gala Coral will lead to any agreement concerning the possible merger or as to the timing or terms of any such agreement and there can be no assurance that, even if reached, any such agreement would be completed. Ladbrokes also notes that, in the event that such a transaction proceeds, it may undertake a non pre-emptive equity placing to strengthen the balance sheet of the Combined Entity.

In light of this development, the Business Review presentation scheduled for 30 June may be re-scheduled depending on how discussions progress.

A further announcement will be made as and when appropriate.

Jim Mullen, CEO Ladbrokes plc, said

"Since becoming CEO my focus has been on a more aggressive plan to build digital scale and grow our recreational customer base across all channels, which is key to creating a more sustainable and growing Ladbrokes. My plans are well advanced and I look forward to presenting them to shareholders.

A merger with Gala Coral could create a combined business with significant scale and has the potential to generate substantial cost synergies, creating value for both companies' shareholders.

The Board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms."

Excellent news and nice jump in the sp.
2517

Jeffries note today:
"There is definite strategic logic to a Gala Coral merger given LAD's struggles to develop digit scale itself. But the deal structure could be dilutive, given fresh equity required, rather than LAD being a bid target as many had hoped. We assume combined marketing spends would be unchanged, with synergies reliant on shrinking the retail estate. We are a little surprised by the market's exuberance this morning.
The boy who cried wolf. Following acres of print speculation about possible M&A at Ladbrokes over recent months and years (some confirmed, most not) the confirmation of a possible merger with Gala Coral is both exciting and disappointing to us. Exciting because the partnership may finally catalyse digital progress; disappointing because there is no bid premium for LAD shareholders. The Board has not yet concluded whether a transaction is strategically attractive and can be delivered to shareholders on appropriate terms. Our first impressions are that this looks quite a defensive strategy for LAD, with new CEO Jim Mullen’s much anticipated Strategic Review on 30 June now potentially shelved.
Strategic appeal. Any plan to revitalise LAD's lagging digit business is worth hearing, and a marriage with Gala Coral has definite appeal on that front. The logic for the merger would be benefits of scale, particularly in growing LAD’s lagging digital offer. Gala Coral reported £200m EBITDA in 2014 versus £218m for LADS, of which £49m from online versus £37m at LAD. In terms of market shares: Gala Coral has 2.1% of the UK sports betting online market in 2014 versus 6.6% for LAD. For online gaming, Gala Coral has 9.5% of the UK market (doubled in the last two years) versus 4.2% for LAD (source Gambling Compliance).
Playtech is entitled to 27.5% of 2017 EBITDA upside in Ladbrokes.com versus a 2012 base of £45.9m multiplied by the underlying group EBITDA multiple at the time, there are interim payments to be made if certain targets are met.
Quick and dirty stab at combined financials. The RNS mentions "the potential to generate substantial cost synergies". With 2,209/1,834 retail stores respectively for LAD/Gala Coral we assume that shop lease costs and associated staff costs are front of mind (not least given likely anti-trust scrutiny), alongside removing duplicated central costs. Given the importance of marketing in supporting the digital offer, we assume the combined marketing spend would be similar to the sum of the parts (c.£47m for each company). We need more information and more time to refine our scenario analysis, but a 'quick and dirty' synergies calculation (10% combined property/staff savings) implies pro-forma EBITDA of £500m (versus £418m ex-synergies). NB Restructuring costs could be significant, particularly in respect of leases.
Dilution from fresh equity. Gala Coral is highly geared, with all in net debt/EBITDA of 11x in 2014 versus 1.8x at LAD. We think the market has little appetite for net debt/EBITDA greater than 2.5x. Gala Coral has a complicated financing structure and at this stage we are unsure how much of any debt will sit outside of the PLC structure, were a deal to consummate.
Understanding this detail is key to gauging the quantum of fresh equity to be issued, which we await before running our numbers. Valuation. Before the open LAD traded on 14.8x 2016 PE and 8.2x EV/EBITDA on our estimates, a justified discount to peers (25% to WMH, 45% to PAP on EV/EBITA) given its weak online division and over-exposure to retail gambling."

last post 16 feb have now a nice profit, will sell @150 pence?

CitiBank note today:
We downgrade to Sell and retain our 125p price target. The deal is high risk and complicated: likely competition authority involvement; unclear management structure; lengthy process; equity issue; execution risk; political sensitivity of LBOs. Other, financial buyers may be flushed out, but probably only when a deal falters and synergies are no longer on the table.
Starting line. We see three key questions for the Ladbrokes/Gala Coral merger: 1) How could the competition authorities permit the transaction? Take a holistic (but new) view of the gaming market, to include lotteries and thus avoid market share issues; 2) What are the likely cost savings? £25m, mainly savings from head office, platform sharing and marketing; narrowing the retail performance gap could add more upside; 3) How much capital would the enlarged group need to raise? We value Gala Coral at c£2bn; with a target 2x net debt/EBITDA ratio, the deal could be financed with £350m additional leverage and £1.7bn of Ladbrokes equity
Citi analysis – limited upside. Our base case (£25m cost savings, £350m fund raise and 2x net debt/EBITDA) also values Gala Coral at 10x EBITDA (inc. 50% of the cost savings), so £2.03bn in total. The debate for Gala Coral is whether the synergy benefits will offset the likely valuation multiple hit from greater proportional retail exposure. We anticipate the deal is c4% earnings accretive. If one optimistically assumes a 10x EV/EBITDA multiple is applied to the enlarged business (William Hill valuation), then a c150p value is possible. Overleaf we provide various cost savings and valuation multiple scenarios.
Different perspectives. The merger holds little downside for Gala Coral (perhaps beyond a break clause), allowing the market to better understand the business and management. Ladbrokes has a different starting point: We await a strategic review, with a new CEO and departing chairman.
 High competition hurdles. Ladbrokes Gala Coral would own c50% of licensed betting offices (LBOs) in the UK, with LBOs a longstanding political hot potato. Convincing the competition authorities to view the deal through a total market lens (thus including lotteries and online) would reduce that market share to greater than 20%."

StockMarketWire.com
A combination of Ladbrokes with most of Gala Coral would create a UK market leader with a stronger business profile than either group could achieve separately, Fitch Ratings says.

But the agency says that depending on the capital structure decided by the new entity, it may need to raise new equity or quasi equity if it wants to achieve a financial profile similar to Ladbrokes' standalone profile.

Ladbrokes revealed the early stage merger talks over Gala Coral's betting shops, Italian operations and online business earlier this week. It did not say how a deal would be structured but that it could include an equity placing to strengthen the balance sheet of the combined entity.

Fitch says that even without an equity placing, the combined entity's credit rating would probably be no more than one notch below Ladbrokes' current 'BB' rating. Any assigned rating would depend on multiple factors, in addition to leverage considerations.

Fitdh says: "The business profile of the combined entity would be supported by the combination of Gala's strong online presence, where Ladbrokes has underperformed, and its Italian operations, with Ladbrokes' and Coral's large UK shop portfolio, well-known brands and long UK track records. Ladbrokes' Australian presence would strengthen the combined group's international diversification.

"We believe there would also be the potential for material cost savings through the closure of some of the combined group's 4,000 UK betting shops. Other synergies and cost savings are possible. For example, the two companies share the same machine provider and could therefore achieve purchasing savings. There may also be revenue synergies from merging the two businesses.

"We would expect some execution risk, particularly in integrating the two online businesses, while the potential demands of UK competition authorities are another unknown. An attempt by Ladbrokes to buy Coral in 1998 was blocked due to concerns it would reduce competition. The subsequent migration of the industry to online means we do not expect a deal would be blocked, but the companies could be forced to sell parts of their UK portfolio, especially given the significant overlap between the two companies in high-street locations.

"As many lease contracts would come to expire in the coming years we would expect an acceleration of shop disposals."

A prime example of short the spikes?

More gaps than in Man Utd defense :0)

Ladbrokes completes £1.35bn merger financing

StockMarketWire.com

Ladbrokes has signed a £1.35bn n facility with a syndicate of relationship banks to provide committed financing for its proposed merger with Coral.

The new facility has three tranches and will be available for drawing subject to completion of the merger with Coral. - Tranche A - £600m term facility - October 2016 and, subject to extension options, January 2018

- Tranche B - £400m revolving credit facility - October 2020

- Tranche C - £350m revolving credit facility - June 2019 Ladbrokes' existing £55m December 2016 bank facilities were cancelled in September 2015 and its remaining standalone £350m June 2019 bank facilities will be cancelled as a condition precedent to drawing on the new facility.

The intention is for the £100m September 2022 and the £225m March 2017 Ladbrokes bonds to remain in place following completion of the merger. As a result of this financing, the Gala Coral debt comprising £315m Senior Secured Note 2018, £275m Secured Note 2019 and £812m Senior Secured Facilities 2018, will not be transferred into the enlarged Ladbrokes Coral group at completion of the merger.

Chief financial officer Ian Bull said: "I am pleased that our relationship banks have shown strong support in putting in place a significant size facility at similar pricing to our current facilities. We believe that this facility will provide sufficient liquidity to an enlarged Ladbrokes Coral group following the merger."



Story provided by StockMarketWire.com

Q3 Interim Management Statement

Q3 2015: TRADING IN LINE WITH OUR EXPECTATIONS – STRATEGY IMPLEMENTATION UNDERWAY

Ladbrokes plc (LSE:LAD) announces its trading update for the three months ended 30 September 2015 (the period or Q3):

The chart in post 112 seems to have died. Let's see if this one can stay alive.