The Irish billionaire Dermot Desmond has attacked the proposed £2bn-plus merger between Ladbrokes and Coral, saying he believed it to be a “wrong deal”.
Desmond, who is a shareholder in Ladbrokes, said on Wednesday the winners in any transaction would be the Coral shareholders and he has urged Ladbrokes investors to vote against the proposal at the group’s EGM next Tuesday.
Instead of the merger, Desmond, who is also a shareholder in Celtic football club, wants Ladbrokes shareholders to insist on the appointment of an independent committee to the board, with advice from an independent investment bank. He hopes this might lead to an alternative plan.
Desmond points out that since the announcement of the deal on 24 July, Ladbrokes shares have fallen from 130p to 109p, wiping out £200m in shareholder value.
In contrast, he pointed out, since the announcement of the merger between Paddy Power and Betfair, their share prices have increased 35% and 20% respectively.
He said Ladbrokes’ chairman, Peter Erskine, and chairman designate, John Kelly, have “led Ladbrokes down the disastrous path to a deal that is effectively the death of Ladbrokes as an independent company”.
Ladbrokes said it remained confident its shareholders would back the deal.
In a statement, the group said: “We have had significant dealings with Mr Desmond as both a shareholder and a commercial partner over recent times. We note his views and are not surprised by them as he has been in extensive dialogue with the management team and not been afraid to talk of undertaking such action. As a shareholder he has a right to express his view and to vote accordingly at the EGM next week.
“The rationale and terms of the merger are in the circular and we remain confident that shareholders see the attraction of the proposed deal and continue to work towards a successful conclusion to the deal.”
Desmond said he expected the Competition and Markets Authority would not clear the deal until the middle of 2016 and thinks at that point Ladbrokes would be forced to dispose of a significant number of shops – between 400 and 1,000.
