The problem with mergers: Ladbrokes, Coral, Paddy Power and Betfair

A few weeks ago, high street betting shop giants Ladbrokes and Coral have announced plans to merge. And, last week, their rivals Paddy Power and Betfair did the same. Now, these mergers still need to be assessed by the competition regulators to make sure that these two new giants won't have unfair monopolies, but there's plenty to recommend the deals - especially for the struggling Ladbrokes.

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One thing we think is important for them to consider is how they integrate their processes. The different chains have different offers and selling points, although a broadly similar customer demographic. All of them are focused in particular on the controversial fixed-odds betting terminals and on their online offerings. They will need to carefully consider how to get their systems to work together, especially their websites and apps, which could prove challenging thanks to technical limitations.

And, if the new groups do end up having to divest shops, they should carefully assess which locations to sell. They should consider things like: proximity to other shops (either owned by them or their competition), turnover, overheads, staff performance and potential changes to their local areas.

Our consultant, Artur Oganov, said, 'It's the fixed-odds machines that could be the biggest problem. There are laws about how many each location can have, so that's why there seem to be more and more betting shops on the streets. But the machines account for 52% of profits from the shops, so they have to have them. If the new groups keep running two networks of those each, they waste a lot of money.'



A story about mergers in the betting industry - how teaming up with a competitor can help you out, but you need to merge your processes carefully.