Coral finally sold in pounds 390m deal.
The deal-which effectively safeguards the name of Britain's third-largest bookmakers on the nation's High Streets-brings to an end an almost year- long period of uncertainty after Ladbrokes initially completed a deal to buy Coral, which was then blocked by Trade and Industry secretary Peter Mandelson.
The news was hailed as "a joyous Christmas present for punters" by Channel 4 Racing presenter John McCririck, who was one of the most vociferous opponents of the proposed Ladbroke/Coral merger.
The new owner of Coral is a subsidiary of Deutsche Bank, which secured the chain through its venture capital arm Morgan Grenfell Private Equity. The latter immediately revealed plans to dispose of the 827 Coral shops within a three-to-
five-year timescale. "MGPE has been involved in many high-profile buyouts and we either float them on the Stock Exchange, in which the ownership goes into public hands, or else we sell them to trade buyers," said Jonathan Derry-Evans, the director who led the Coral transaction.
"In terms of Coral I think the exit route is very much flotation and this is what we would aim to do in three to five years."
He said the policy was "exactly" the same as that employed by William Hill owners Nomura, who are currently considering future options for its bookmaking chain.
Ladbrokes, who have made a pounds 40m profit since taking over the Coral chain on the final day of last year, managed to secure a pounds 27m higher purchase price than they originally paid for the business.
Chris Bell, managing director of Ladbroke Racing, said: "The final offer is a very solid price which gives a strong vote of confidence in the state of off-course betting."
But Ladbrokes' financial gain, which will be used to reduce group debt, was quickly highlighted by BHB chief executive Tristram Ricketts as a cue for increased contributions to a new Levy scheme. "It will further reinforce the BHB's determination to secure an increase in the percentage of betting turnover flowing to racing," he said.
Morgan Grenfell's purchase of Coral includes the company's 827 shops, its credit and telephone betting operations and the Romford and Hove greyhound tracks.
"Whilst we would have liked to have kept Coral, the excellent price that we have achieved underlines the long-term potential of the off-course industry, in which we remain the largest operator," said Peter George, chief executive of the Ladbroke group.
Rival bookmakers the Tote and Stanley Leisure were both linked to a Coral purchase before the field was narrowed down to two-Deutsche Bank, via Morgan Grenfell, and another equity firm, Cinven.
The Tote dropped out last Friday after making a final bid of pounds 375m. "I'm disappointed for the Tote, but the pounds 15m gap between the Tote's last offer and the final price was very large; it wasn't even a photo-finish," Bell said yesterday.
Tote chairman Peter Jones commented: "We are surprised that a venture capitalist could justify paying pounds 390m for Coral, but clearly their sums are different from ours."
Morgan Grenfell, whose previous buys include the British School of Motoring and Taunton Cider, said it would be "backing all the way" the existing staff at Coral.
Graham Hutton, chief executive of Morgan Grenfell Private Equity, said: "Coral operates in a progressive and innovative way, bringing a more consumer-friendly approach to this industry. We intend to continue to invest in the business and develop the franchise."
Coral will now be run by Bob Scott, 45, who has recently been operations director of Mecca and began his career in the betting industry with William Hill.
Derry Evans said Morgan Grenfell was keen to retain the existing management team at Coral of Vaughan Ashdown and Trevor Beaumont. "Bob Scott will be responsible for the day-to-day running of the business and everything we have heard about Vaughan Ashdown and Trevor Beaumont means they are very, very important to the future," he said.
What the deal involves
827 betting shops in the UK (832 in original deal, down by property movement in meantime)
Credit and phone-betting operation; fourth biggest in UK
Two greyhound tracks-Hove and Romford
Stakes in companies operating betting-shop numbers games Lucky Choice (with William Hill and Tote) and 49's (with William Hill)
lVarious properties; freehold and leasehold, including head office at Barking, Essex, employing 230
What it doesn't involve
50 betting shops in Ireland; Irish competition authority agreed there was no case to answer
8 betting shops in Jersey; does not come under jurisdiction of Monopolies & Mergers Commission
Five per cent stake in SIS; taken on by Ladbrokes under pre-emption rights of existing SIS shareholders when Bass sold Coral's 11.84 per cent holding; future under discussion with Office of Fair Trading
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|Publication:||The Racing Post (London, England)|
|Date:||Dec 23, 1998|
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