Dermot Desmond will challenge Ladbrokes's and Coral's agreement to pay their partner Playtech €106 million, in a bid to have the pair's €3.3 billion merger put to a second shareholders' meeting.
The Irish financier, who owns 2.8 per cent of Ladbrokes, vowed to continue his fight against the listed bookmaker's merger with Coral after a 96 per cent majority voted for it at a shareholders' meeting yesterday.
Tomorrow he is due to ask the hearings committee of the London Stock Exchange Takeover Panel, which regulates quoted companies, to put the deal to a second meeting on the basis that Ladbrokes failed to publish information material to the transaction in a circular sent to shareholders in October.
Mr Desmond complained to the panel earlier this month about an agreement to pay both companies’ technology partner, Playtech, £75 million (€106 million) as part of the merger. He argued that details of contracts connected with this should have been published.
The Takeover Panel ruled against him and he then asked that the hearings committee review this decision.
Ladbrokes has agreed with Coral and the panel’s executive, to convene the second shareholders’ meeting if the committee finds in Mr Desmond’s favour and declares the information should have been published.
Market sources explained the committee will not take yesterday’s vote into account and must weigh Mr Desmond’s case on its merits.
However, they suggested that he could find it difficult to overturn a 96 per cent majority if he succeeds in getting a second meeting.
Terms
Under the deal’s terms, Coral will get a 48.25 per cent stake in Ladbrokes. Stock exchange rules state that anyone who acquires 30 per cent or more of a listed company must offer to buy out the other shareholders.
The panel agreed to allow Coral waive this, subject to conditions, to facilitate the merger.
Mr Desmond declared that yesterday’s meeting was only the first of 15 rounds. “This is only a start,” he told reporters.
He launched a campaign against the merger last week with an open letter to shareholders warning that it was the wrong deal for Ladbrokes.
He predicted GalaCoral’s indebted shareholders and Playtech would be the only winners.
Speaking at the meeting, he described Ladbrokes’s performance over the past five years as “abysmal” and argued the board and management had not earned the right to do the deal. “Total profit before tax has declined almost 40 per cent in that period,” he said. “Had it not been for a £90 million increase in contribution from fixed-odd-betting terminals, profits would have nearly been wiped out entirely.”
He warned that, as a result of the merger, the UK competition regulator could force the merged company to sell 400-1,000 shops, costing it £70 million in lost earnings.
“In truth, the scale and cost of these disposals is totally unknown. What is known, however, is that it is unlikely in those circumstances that Ladbrokes, as a forced seller, will match the price being paid to GalaCoral.”
