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By acquiring Ladbrokes Coral (LCL), GVC will become a FTSE 100 global gaming business, with pro forma FY18e revenues of £3.4bn. With strong brands, diversified revenues and a superior technology, GVC is well positioned to benefit from increased scale and we anticipate the deal to be highly accretive, due to the £100m+ cost synergies. At this stage, there are still many moving parts to our pro forma estimates, with particular uncertainty surrounding the outcome of the Triennial Review and ultimate FOBT stake limits. Irrespective of the outcome, strong FCF should rapidly drive down leverage, which peaks at 3.2x for a £20 FOBT scenario (2.7x for £2). Assuming a £20 stake limit, GVC trades at 10.7x EV/EBITDA and 13.3x P/E for FY19e, a c 5% and 19% discount to Paddy Power Betfair (PPB).

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