Ladbrokes and Coral may have to sell 400 shops to get merger approval, CMA says

Completed merger would create chain with 4,000 betting shops

UK regulators blocked 1998 bid on competition concerns (Getty Images)

Ladbrokes and Coral may have to sell as many as 400 shops to get approval of a merger that would create the Britain’s biggest betting-shop chain, the UK’s competition watchdog said.

The companies operate in 659 areas where the merger would create a “substantial” loss of competition, the Competition and Markets Authority said Friday in its provisional report on the deal.

“It’s a significant step,” a Ladbrokes spokesman said.

“We’ll work closely with the CMA to implement the remedy. Our focus will be to find a suitable buyer or buyers” for the shops.

Ladbrokes agreed to buy Coral in July last year in a share-exchange deal to create a chain with about 4,000 betting shops.

The combined business will be called Ladbrokes Coral and will have annual net revenue of £2.1 billion ($3.1 billion).

“The merger between two of the largest bookmakers in the country may be expected to reduce competition and choice for customers in a large number of local areas,” said Martin Cave, who headed the inquiry.

For “customers, competition comes from the choice of shops in their local area and it’s they who could lose out from any reduction of competition and choice.”

The move is Ladbrokes’ second attempt to acquire Coral, after regulators blocked its bid in 1998.

The final report will be published at the end of July.

© 2016 Bloomberg L.P