Dermot Desmond is lone voice of dissent at Ladbrokes’ £2bn merger vote

Irish billionaire makes rare public appearance to put the boot into ‘abysmal’ board

Dermot Desmond is worth an estimated £1.1bn and is known as Ireland’s answer to Warren Buffett (Getty Images)

The presenter Clare Balding was the star turn when Ladbrokes last held an event at the City’s Brewery corporate venue less than a fortnight ago, when the bookmaker’s annual fundraising bash made almost £250,000 for the Bobby Moore Foundation.

On Tuesday, the smattering of private shareholders who braved the rain and the early start made do with Irish billionaire Dermot Desmond, who made a rare public appearance at the Brewery to oppose the bookmaker’s £2bn merger with rival Coral.

Mr Desmond – worth an estimated €1.5bn (£1.1bn) – is known as Ireland’s answer to Warren Buffett, building up his fortune over a career spanning nearly 40 years. He has been a shareholder in Ladbrokes for nine years, holding a stake of 2.8 per cent. The fact that he paid an average £3 a share for his stake in a business now trading at 110p – representing a paper loss of more than £50m – is fuelling his ire at the current board, whose performance he labelled “abysmal” over the past five years.

Ladbrokes has lost ground to rivals like William Hill and Paddy Power – triggering a dire run of profit warnings in 2013 under previous chief executive Richard Glynn. Investment bankers describe the merger as “two drunks propping each other up” although Ladbrokes chairman Peter Erskine insists the deal would “accelerate our ability to build growth, particularly in the digital and online area”.

Mr Desmond twisted the knife at the meeting as he contrasted the bookmaker’s fortunes with those of rivals in the past decade, saying: “Shareholders won’t need me to remind them of the decline in the Ladbrokes share price, nor the fact that peers William Hill, Betfair and Paddy Power are 91 per cent, 100 per cent and 300 per cent respectively ahead over that same period.”

He admitted his protests were doomed to failure – indeed more than 96 per cent of votes cast were in favour of the deal. But since going public in his opposition last week and following meetings with shareholders, he claimed they were voting for the deal “out of a sense of frustration and resignation with the current board and management”.

Chief among his complaints is the “badly negotiated” £75m settlement paid to Israeli software firm Playtech, brought in by Ladbrokes to improve its online business in 2013. Then there’s the question of the Competition and Markets Authority, which could force the combined business to sell off as many as 1,000 of its 4,000 betting shops. This would hit profits by as much as £70m, outweighing £65m in cost savings. He added: “In truth, the scale and cost of these disposals is totally unknown.”

He demanded Ladbrokes call another meeting of shareholders following the CMA’s verdict to gain further approval for the merger, although this was swiftly rejected by Mr Erskine. Mr Desmond asserted that private-equity owned Coral and Playtech shareholders “are the big winners here with shareholders again paying the price of management ineptitude”.

Speaking after the meeting, he said Ladbrokes’ board had allowed the likes of Betfair, Bet365 and Paddy Power to “steal a major march” and had paid the price for not developing its own technology. There were also “smarter deals the firm could have done”, possibly alluding to three previous efforts to buy online specialist 888 Holdings. And he even cheekily suggested he might bid himself at a “very low price”. “There is a price at which every company is worth bidding for. This is not the announcement of a takeover but Ladbrokes at 30p might be good value.” With that kind of talk Mr Desmond – who has no immediate plans to sell his stake – could be stirring up trouble for a while yet.