After a long period of negotiations, Ladbrokes and Gala Coral have agreed a deal worth £2.3 billion which sees the new company known as Ladbrokes Coral become the UK’s biggest bookmaker, surpassing industry giants William Hill. But news of the new deal soon soured when it was revealed who was to front this new merger, none other than disgraced former HBOS bank boss Andy Hornby.
Hornby had to leave HBOS after it was bailed out by the British taxpayer to the tune of £20.5 billion in 2008 after collapsing due to gross negligence on the part of Hornby alongside other HBOS directors. The media backlash has seen Ladbrokes CEO Jim Mullen produce a half-hearted statement in defence of Hornby. When asked whether he understood the public’s reservations surrounding Hornby’s appointment, he merely stated ‘I understand peoples view’.
Jobs for the boys?“Hornby has faced heavy criticism since his role in the 2008 collapse of HBOS which, following a spate of irresponsible lending, triggered a £20.5 billion bailout by the British taxpayer”.
Former Halifax Bank of Scotland boss Andy Hornby, who has been accused by MP and Chairman of the Treasury Select Committee Andrew Tyrie of being responsible for ‘catastrophic failures of management’ while at HBOS, has been appointed CEO of the newly formed group. Joining Coral in 2011, Hornby has faced heavy criticism since his role in the 2008 collapse of HBOS which, following a spate of irresponsible lending, triggered a £20.5 billion bailout by the British taxpayer. A report published by the Parliamentary Commission on Banking Standards found that Hornby was ‘unwilling to change course’ at HBOS and ultimately set the bank on the ‘road to disaster’.
A further report, put together by the Financial Conduct Authority, is also predicted to expose the ‘colossal failures’ made by Hornby and his cronies whilst at HBOS. Shareholders have been extremely vocal in their resistance to his appointment, which has proved to be extremely controversial. This along with the pending investigations will ultimately keep him from joining the board at this time. Many journalists have accused the UK government of shielding Hornby and others like him that were involved in the UK financial crash, stating he should have been arrested and tried in a court of law.
New group to face initial cuts
As Coral is a privately owned equity firm, the added power this deal brings should go a long way to buffing their foray into online casino markets. This will see them going up directly against rivals William Hill and Bet365 for a greater increase in online market share. While their online operations seem to be getting a huge boost from the deal, their land based operations will suffer as a direct result of the new merger.
For the moment Hornby will also be responsible in overseeing the operation of Ladbrokes Coral’s betting shops. The deal will see the closure of over 4000 shops and the loss of around 30,000 jobs as a result of monopoly rulings. Current Gala boss and soon to be Executive Deputy Chairman Carl Lever described the number of disposals as ‘manageable’.
A done deal
The brand new deal is likely to bring around £392 million in new profit to the group, along with projected savings of around £60 million yearly which will go directly towards boosting their lagging online operations in an attempt to compete against the growth of other popular online operators. Ladbrokes announced that in order to fund the deal it would be placing around £120 million in shares which represents 10% of its share capital. This deal will see the division of shares at 49% for Coral and 51% for Ladbrokes in terms of shareholders.