Bookie tie-up dependent on regulator condition

A proposed merger between two of the biggest bookmaking companies in the UK will be cleared by authorities on the condition they sell off hundreds of betting shops.

According to a press release last Friday by the sector watchdog, The Competition and Markets Authority (CMA), the deal could severely hamper smaller competitors and slimming down on the number of storefronts will be needed.

Ladbrokes plc, former owners of the Hilton hotels, and Gala Coral Group Ltd, owned by a consortium of private equity firms, will have until mid-June to offer counter arguments to the details within the report including the condition that up to 400 shops will need to be closed.

Gala Coral, headquartered in Nottingham and Gibralter, has eighteen hundred betting shops across the UK and has its bingo operations in 137 clubs across the nation.

Ladbrokes are a slightly bigger firm with over 2000 stores and is listed on the London Stock Exchange. The deal was initially agreed on this time last year.

The biggest UK betting company currently is William Hill, which operates worldwide and employs over 16,000 staff. If the merger goes through the new Ladbrokes-Coral company will eclipse the market leader.

A spokesman for CMA, Martin Cave said, “Although online betting has become relatively popular, we feel that physical shop fronts are still very popular to a significant number of customers. And it is these people who stand to lose out if a high street monopoly is formed and this is why we feel conditions for this proposed merger are necessary.”

Cave added that a final report would be published by the end of next month.
In response to the preliminary findings from the CMA, Ladbrokes said, “We respect the initial findings of the report and are determined to reach an agreement with the CMA regarding the number and location of shops we need to terminate.”

The merger is said to be priced in the region of 2.4 billion pounds, and Ladbrokes shares climbed 6.7 percent with the recent news. Experts say the newly formed company will not be overly affected by the proposed shop closures.

Jonathon Price, Director of Mergers & Acquisitions at Nikko Holdings commented in an email to clients yesterday, “Ladbrokes-Coral looks like it will be the dominant force In the UK betting sector regardless of the CMA’s enforced shop disposals. With the amount of overlap the two firms have in the field we are going to see substantial cost savings.”

Greenback slows up after knee jerk hike reaction

European currency markets watched the dollar hold up its recent gains on Friday, after the rumours of U.S. interest rate increases by September pushed the greenback to new levels.

The dollar nearly drew level with the euro in 2015 and the recent gossip coming out of the Fed, combined with sturdy data reports, has had a positive effect on the currency markets and resurrected rally hopes particularly among hedge funds.

Currency managers are proceeding with caution however, especially in an election year, with suspicion still strong that the slide in the greenback observed since the first quarter have been affected greatly by politics.

Most experts have been disheartened recently by the dollars failure to gain, and data from this week shows the currency markets now betting it will go in the opposite direction.

“A long greenback position is popular with investors, even today,” said Jonathon Price, Director of Mergers & Acquisitions at Nikko Holdings, “The reason is not because the monetary policy gap is not there, it is, but too many investors have been burnt in the past.”

Nikko Holdings have preferred to back the dollar against Asian currencies rather than its basket peers. “We are confident the dollar increase will no longer be against the usual suspects who have used their central banks to weaken through easing methods and negative interest rates. We see what happened with the yen in the first quarter,” Price added

The figures for the dollar were stable at $1.1221 following a recent high on the euro zone trading floors of $1.1207 and up 0.2 percent on the .DXY, its measuring stick against its major competitors.

Japanese bank trader sentiment points towards a steadier pace for a greenback rise against the yen mainly due to the ability of the nation’s exporters to sell the currency.

The news will please Japanese economic authorities who have been panicking lately over the yen’s strength and the knock on affect to the economic recovery of the country.

These subjects are more than likely to be a major talking point at the Group of 7 summit due to take place in Japan at the end of the week. The meeting for the worlds most advanced economies could be prickly on the dollar/yen situation and there may well be divided opinion over a spectrum of peripheral issues also.

There is expected to be some opposition to Japanese monetary easing, especially from the U.S.