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GVC's Ladbrokes takeover to be centre of attention in 2017 results

The day ahead will see full year results from GVC and the US non-farm payrolls report
GVC
GVC expects net gaming revenue to top £1bn for the first time in 2017

GVC Holdings PLC’s (LON:GVC) planned acquisition of Ladbrokes Coral PLC (LON:GVC) will be a key focus when the sports betting company reports its full year earnings on Friday.

Ahead of its results, GVC said on Thursday that shareholders have approved its takeover of Ladbrokes, which is expected to deliver cost synergies of at least £100mln a year

The final price paid will depend on the outcome of the government’s review into fixed-odds betting terminals (FOBTs).

The government said in October that it would reduce the top stake on the gambling machines from £100 to between £50 and £2 to tackle problem gambling.

If the stake is cut to £2, as many media reports have suggested, GVC will pay the £3.1bn it has offered for the company. But if the government only lowers the stakes to £50, then GVC would end up paying roughly £3.9bn.

“Since the announcement of detailed talks last December, GVC shares have remained broadly flat, with the exception of reacting to news on potential FOBT maximum stake outcomes given the materiality of its Contingent Value Right (CVR) for Ladbroke shareholders,” said Numis.

For its 2017 full year earnings, GVC has already said it expects net gaming revenue to top the £1bn mark for the first time and predicts underlying earnings will reach the top end of its guidance following a strong fourth quarter.

However, the results will include a €200mln provision after its Greek division was slapped with a tax bill from a local authority.

US non-farm payrolls eyed

In macro-economic news, all eyes will be on the US non-farm payrolls report from the Labor Department.

Economists expect the data to show US employers added 205,000 jobs in February after 200,000 in January.

The unemployment rate is forecast to fall to 4.0% from 4.1% while average hourly earnings are estimated to grow by 0.2% month-on-month and 2.8% year-on-year.

A strong jobs report is likely to fuel bets that the US Federal Reserve may increase interest rates at a much-faster pace than previously expected.

Fed boss Jerome Powell has already hinted that more US rate hikes than currently anticipated could be on the cards.

Significant events due

Finals: Inmarsat Plc (LON:ISAT), GVC Holdings PLC (LON:GVC), SIG PLC (LON:SHI ), Eurocell PLC (LON:ECEL), Independent News & Media PLC (LON:INM)

Economic data: UK trade; UK industrial, manufacturing production; UK construction output; US non-farm payrolls; US wholesale trade


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