Ladbroke near to Coral sale
London to dominate trading in new currency from 4 January
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Your support makes all the difference.LADBROKE'S sale of the Coral betting shop chain to one of two financial buyers - Cinven or Morgan Grenfell Private Equity - is set to be concluded this week, according to bankers close to the deal.
On Friday, the two finalists tabled bids of just under pounds 390m as a third prospective buyer, the Tote, withdrew after its pounds 375m bid was rejected, sources said.
This week, Ladbroke will pit Cinven and Morgan Grenfell Private Equity against one another in an effort to squeeze a pounds 400m bid from the winner.
No one close to the deal was willing to predict which of the two was likely to win the Coral chain. Cinven has the more established track record in bidding wars, City bankers said. But Morgan Grenfell Private Equity, a unit of Deutsche Morgan Grenfell, is looking to make its mark.
A venture capitalist not involved in the deal backed this view. The company's operating profit of pounds 17m in the six months to 30 June was buoyed by unusually favourable track conditions, he said. Profits were also buoyed by deregulation permitting bookmakers to put fruit machines in betting shops. These changes boosted margins by 0.5 per cent, he calculated, but were not sustainable.
Those defending the high bids for Coral respond that it is the third largest bookmaker with 833 shops, and that the popularity of betting is likely to prove resistant to an economic downturn next year.
Ladbroke bought Coral from Bass for pounds 363m last year. But this summer, Peter Mandelson, the Secretary of State for Trade and Industry, upheld a Monopolies & Merger Commission report recommending that the acquisition be blocked on competition grounds. With its 1,900 betting shops Ladbroke is Britain's largest bookmaker.
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