Private Equity Groups to finally call “Full House” on Gala Coral Group?

This week has seen the announcement that Ladbrokes Plc, the UK-listed betting and gaming company, and Gala Coral Group have reached an agreement on a EUR 1.5bn deal that will provide an exit for private equity firms Cerberus Capital, Anchorage Capital and Apollo Global.

Whilst on the face of it this appears simply to be one successful corporate consolidating its position within its home market and expanding its customer offering, when you look a little more closely at the deal history of Gala Coral, it makes an interesting story which fully demonstrates the whole lifecycle of private equity investments.

We started with two separate companies, Coral Group and Gala Bingo, then in the late 90s both companies started their private equity journeys, with Morgan Grenfell Private Equity paying EUR 557m for Coral and PPM Ventures (now known as Silverfleet Capital) paying GBP 235m for Gala Bingo. Coral Group made a bolt on acquisition, acquiring Eurobet within 7 months of their own PE deal, and re-branded themselves as Coral Eurobet. Coral Eurobet had a relatively quiet three years and then in 2002 Charterhouse backed the Coral Eurobet management in a deal worth EUR 1.3bn and Morgan Grenfell exited the company.

In 2003 Gala Bingo was acquired jointly by Candover & Cinven in a deal worth EUR 1.8bn, and a couple of years later in early 2005, Permira Private Equity paid EUR 295m for 33 per cent.

So in summary at this point, we have two separate companies in very similar industries both having been owned by multiple private equity firms in a succession of deals!  Move forward to October 2005 and we see a classic example of a “consolidation” of separate portfolio companies, with Gala Paying over EUR 3bn for Coral Eurobet with the equity backing of its existing PE companies Cinven, Candover and Permira. Within three years of this deal, the GFC had hit and the newly enlarged company of Gala Coral had been struggling under the burden of its leverage combined with the downturn in consumer spending and restructuring plans were being considered for the group, including debt for equity swaps. These difficult times resulted in Apollo Management, Cerberus Capital, York Capital and Park Square Capital paying EUR 667m for the business in June 2010, with the deal structured on a debt for equity basis.

And now we have the natural ending with the announcement of the deal between Ladbrokes and Coral. Well, complete until such time that another Private Equity firm decides to take the newly enlarged business private somewhere in the next five years!!!!