Ladbrokes Coral merger approved by watchdog but bookies must sell 400 shops

The merger between two of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas, according to the competition watchdog

Ladbrokes and Gala-Coral are seeking a merger that will create the Uk's largest Bookmaker, overtaking William Hill (Getty)

Bookmakers Ladbrokes and Gala-Coral must sell around 400 shops to allay competition watchdog fears over their £2.3 billion the regulator has said.

The Competition and Markets Authority identified 642 areas where it believed the merged companies could hurt competition.

A merger between Ladbrokes and Gala-Coral, which together run 4,000 betting shops, would see the pair overtake William Hill to create the UK's largest bookmaker.

Competitors Betfred and Boylesports are currently in talks with Ladbrokes and Coral about purchasing the shops. Several private equity firms have also reportedly shown an interest.

Martin Cave, who led the CMA's inquiry, said: “We've found that the merger between two of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas.

”Although online betting has grown substantially in recent years, the evidence we've seen confirms that a significant proportion of customers still choose to bet in shops - and many will continue to do so after the merger. We therefore believe that a sale of shops of this scale is needed to protect these customers.

“It is now for the parties to propose a divestment package and one or more suitable purchasers for the CMA to approve.”

Some analysts had predicted up to 1,000 retail outlets might have to be offloaded.

“This is a significant step forward and we will now begin to talk in earnest to the potential buyers for these shops,” Ladbrokes said. Coral said that “discussions with potential buyers can now accelerate”.

Britain's betting sector is seeing a wave of consolidation.

On Monday William Hill, which is without a CEO, said it had received a preliminary takeover approach from casino operator Rank and online gambling group 888.

Last year William Hill failed in a takeover attempt of 888 itself, while 888 had agreed to buy UK-listed Bwin.party but was jilted in favour of GVC Holdings.

Paddy Power and Betfair agreed to join forces in September.

© Reuters