Stanley and Tote may link up for Coral bid
Friday 25 September 1998
Stanley, a book-making chain, and the state-owned Tote are considering a joint bid for the 833 Coral shops, following Wednesday's decision by the Department of Trade and Industry to block the pounds 363m Ladbroke takeover on competition grounds.
The two bookmakers are set to face stiff competition from a number of venture capitalists, believed to include Nikko, CVC, Charterhouse and NatWest Ventures. Nomura, the acquisitive Japanese finance house, is thought to be out of the running because it already owns William Hill, the UK's second-largest bookmaker.
A spokesman for Ladbroke, which has been given six months by the DTI to sell Coral to a single buyer, yesterday said that the company had received "a dozen expressions of interests from serious contenders".
The company said it hoped to recoup the pounds 363m it paid the brewing giant Bass for the Coral shops, but added that it could be forced to accept a lower price due to the uncertain economic conditions.
One of the venture capitalists considering a bid said yesterday that Coral was likely to be sold for a price "substantially below" pounds 363m. He predicted initial offers would be pitched at between pounds 200m and pounds 300m.
A number of potential financial buyers are understood to be looking at "securitisation" to finance the Coral purchase. The practice, which has been used by venture capitalists to finance some of the City's most audacious deals, essentially enables the buyer to offload the risks of the transaction by selling high-yield bonds secured on the cash-flow of the company being acquired.
Sources close to Stanley Leisure, the third-largest bookmaker in the country, said it was talking to the Tote about an offer for Coral. A joint bid with Stanley would enable the Tote to retain the 133 Coral outlets bought from Ladbroke earlier this year for around pounds 46m.
The deal was conditional on the approval of the Ladbroke acquisition and the DTI's decision meant that the state-owned bookmaker would have to return the shops to Ladbroke.
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