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Investors bet big on GVC as Barclays backs £4bn takeover of Ladbrokes Coral

Barclays’ Patrick Coffey is a fan of the tie-up, which was confirmed just before Christmas
foxy bingo mascot
GVC owns several well-known gambling companies including bwin, Sportingbet and Foxy Bingo

Shares in GVC Holdings PLC (LON:GVC) zipped higher early Tuesday after analysts at Barclays gave their backing to the sports betting firm’s £4bn takeover of rival Ladbrokes Coral Group PLC (LON:LCL).

That deal was announced just before Christmas and will create one of the largest gambling groups in the world.

READ: GVC to buy rival Ladbrokes Coral in deal worth up to £4bn

Patrick Coffey – from Barclays’ well-respected London investment banking arm – reckons the takeover is attractive for three reasons.

“1) Greater scale: a key attribute in the gaming sector in our view, 2) High growth: buoyed by revenue but mainly by cost synergies, and 3) Geographic diversity: guarding against higher taxes in mature markets,” he wrote in a note to clients on Tuesday.

Coffey also notes that both management teams have a “strong track record” of integrating complicated businesses and beating synergy guidance – which it currently expects to be "at least £100mln."

READ: GVC Holdings reports strong third quarter

As a result, the analyst has initiated his coverage of GVC with an ‘overweight’ rating and a £10.66 price target.

Shares in GVC jumped 1.8% to 942p early on Tuesday, making it one of the top gainers on the FTSE 250.

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