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Sparks Team
17 May 2018 · 3 min read

GVC Holdings (GVC); Triennial review: UK govt cuts stakes on B2 content to a max of £2 per spin

Stock down 4.42% to 875.0p at 08:10

The UK government today published its final decision to cut stakes on B2 content to a maximum of £2 per spin. GVC is disappointed with the outcome but does not intend to seek a Judicial Review of the decision.

In the first full year the impact on Group EBITDA is expected to about £160m. The focus on the UK retail operation over the last two years has enabled GVC to be well-positioned to face these changes. The company expects to be able to reposition its business within two years following implementation, with an anticipated fully mitigated impact of c£120m on Group EBITDA secured by the end of this period.

The offer for Ladbrokes Coral Group had already factored in the possibility of £2 maximum stake Triennial Review, so today’s announcement does not impact the minimum targeted synergies of at least £100m per annum. As part of the consideration paid for the acquisition of Ladbrokes Coral, GVC issued every Ladbrokes Coral shareholder a Contingent Value Right (“CVR”) for each Ladbrokes Coral share that they held. If this legislation is enacted prior to 28 March 2019, the value of each CVR will be zero. In such circumstances, no payment would be required to be made by GVC to CVR holders and the CVRs would be automatically cancelled.

Kenneth Alexander, GVC’s CEO said: “Although we are ultimately disappointed with the outcome of the Triennial Review, it is a decision we accept. The uncertainty has weighed heavy on the industry and the many thousands of people who work within it. Our focus now is to work with Government to build a constructive relationship that will ensure a positive future for the sector and the many millions of customers who enjoy our products responsibly.”

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