GVC Sells Its Turkish Business To Maltese Company
It has been announced last week that online gambling group, GVC, has struck a deal to sell its Turkish business. The deal is estimated to cost €150m and could lead to Ladbrokes Coral or William Hill being taken over in the near future.
The deal was struck last Thursday, with GVC suggesting it had sold Headlong Limited along with other businesses to Maltese group, Rospo Malta Limited. The two companies have been in a close relationship for a while now, with Rospo Malta Ltd providing IT services for GVC’s Turkish business.
In a statement regarding the deal, GVC boss, Kenny Alexander has said:
“As the group evolves, our focus is increasingly on regulated markets and markets where we believe there is a realistic path to regulation.”
“Today’s disposal is consistent with this strategy and enhances GVC’s position as a leading operator in a rapidly developing industry.
This deal leads GVC away from its previously successful strategy of targeting markets that are neither taxed or regulated in countries around the world.
It has been suggested by big bank, Citi, that almost 30 per cent of GVC’s revenue comes from the unregulated and untaxed markets, but have decided to join rival operators, Paddy Power Betfair, in moving away from those particular markets, as both companies believe such operations may face swift regulatory action.
This immediate deal could lead to vast implications for the gambling sector, due to GVC’s previous talks with Ladbrokes coral in an attempt to take over; no deal was agreed, with Ladbrokes Coral suggesting they are worth more than the £3.6 million offer. The companies were unsure on how their businesses would be affected by any government interventions into the industry.
GVC has also held talks with William Hill, another rival, but the deal was not able t be made, and talks broke down.
Both William Hill and Ladbrokes Coral had voiced their concerns over GVC’s business in Turkey, due to the fact that the country isn’t regulated.
In a statement made by Cenkos Securities, Simon French had said:
“Whilst clearly earnings dilutive, [GVC’s sale of its Turkish business] is a compelling strategic move resulting in a more regulated and attractive business, even better positioned to participate in sector mergers and acquisitions,”
It has become clear that Ladbrokes Coral will be strongly affected by the governments plans to tackle FOBTs, as they make up such a large part of revenue for the company, and several other operators too.
Whilst in Malta, it has been suggested that FOBTs should only allow maximum stakes that are significantly lower than what are possible to be made presently.