Gambling giant Ladbrokes Coral is in "detailed" talks over a takeover by online rival GVC over a deal that could value the group at up to £3.9bn.
According to today's press release, Ladbrokes stockholders are likely to be offered cash and shares equal to 160.9p a share, plus an uplift worth up to 42.8p a share depending on the outcome of the United Kingdom government's ongoing regulatory review.
The takeover terms value Ladbrokes Coral at £3.1bn, rising to a maximum OF £3.9bn depending on the outcome of the review by the Department of Digital, Culture, Media and Sport.
In its corporate update, GVC governance chose not to detail any structural arrangements but disclosed that CEO Kenny Alexander is designated to become CEO of the enlarged group.
"GVC coming in before knowing the outcome of the all-important government review into the industry was probably an outside bet, ' said George Salmon, equity analyst at Hargreaves Lansdown, pointing to the 'significant chunk" of Ladbrokes Coral revenues from FOBTs.
Following a £2.3 billion merger past year between Ladbrokes and Coral, the firm became the UK's biggest High Street bookmaker. Any deal would lead to GVC owning 53.5% of the combined group, with Ladbrokes Coral shareholders owning 46.5%. The enlarged entity would be "an online-led, globally-positioned betting and gaming business that would benefit from a multi-brand, multi-channel strategy applied across some of the strongest brands in the sector".
GVC shares gained 5.72% to 961.0p each in morning trading while Ladbrokes Coral's stock jumped 25.42% to 170.20p.
GVC, which boasts 79 million registered accounts and operates in 21 languages through names such as sportingbet and partypoker, previously bought bwin.party in 2016.
The review is part of a government crackdown on FOTBs after MPs raised concerns the machines were too addictive and fuelled problem gambling.
The tie-up would put the newly formed group in a strong position in major markets such as the UK, Italy and Australia, it added. There could also be synergies from the deal, while the Board of GVC also believes that the transaction would be double digit EPS accretive from the first full year post-completion.
It announced last month that the maximum stake would be cut from £100 to between £2 and £50. GVC shareholders would be entitled to the rest.