Are All Bets Off? Time To Consolidate For William Hill Plc, Ladbrokes Plc, GVC Holdings Plc & 888 Holdings Public Limited Company

Will the likes of GVC Holdings Plc (LON:GVC) and 888 Holdings Public Limited Company (LON:888) be targets for larger companies like Ladbrokes Plc (LON:LAD) and William Hill Plc (LON:WMH)?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Things have been difficult in the gambling sector of late.  It is fair to say that the companies that engage in this sort of business are soft targets for Chancellors from any party.  The recent Point of Consumption tax, currently set at 15%, that captures offshore companies as well as operators based here in the UK is a prime example.  It is perhaps no surprise, then, that investors are currently uncertain given the current headwinds facing the sector.


One way to combat this is for the companies in the sector to take over smaller players.  We’ve seen this attempted recently with William Hill (LSE: WMH) making an approach for 888 Holdings (LSE: 888) at a price tag of 200 pence per share, plus a 3 pence per share dividend.  That deal fell through, but I suspect there will be plenty of activity going forward as some of the larger players look to snap up some of the smaller companies with a view to boosting their online presence and mitigating the current taxing environment.

Indeed, a number of the larger players including Playtech and GVC Holdings have specifically mentioned that acquisitions will be part of their strategy going forward.  As such, I don’t think that this will be the last deal to present itself.

Going Online, Mobile and Further Afield

I don’t think that anyone will disagree that Ladbrokes (LSE: LAD) online offering was a disaster in 2013 and it has been busy in the first half improving its offering.  Results seem to be heading in the right direction, too, with the company expecting to finish 2014 in line with expectations — although expectations were not overly optimistic.

So, is it time to head for new geographies while using new technologies?  It seems to be working for GVC Holdings (LSE: GVC).  It has a strong presence in Latin America, which was greatly assisted by the FIFA World Cup, and their proprietary mobile technology is well suited to in-play betting.  My main concern here is regulation.  Despite this, the stock trades on a forward P/E of just 8.5 with a yield of close to 9%, making it the cheapest in the sector for me.

Nothing is Certain

Whilst I think that the larger players in the field will have to acquire in order to move forward, one should not base any investment decisions on the hope of a takeover alone. And whilst I believe there are some interesting opportunities here with stocks on low valuations and generous yields, this should be just a starting point for your research.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Dave Sullivan owns shares in GVC. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Up 14% in 2024, what’s next for the Lloyds share price?

This Fool takes a closer look at what prompted the Lloyds share price to rise this year, and offers her…

Read more »

Investing Articles

5 FTSE 100 stocks to consider for a lifetime of passive income

I see lots of cheap dividend stocks in the FTSE 100 right now, but prices are starting to rise. Here's…

Read more »

Man writing 'now' having crossed out 'later', 'tomorrow' and 'next week'
Investing Articles

3 growth stocks I’m desperate to buy as the FTSE 100 dips

Never waste a dip, says Harvey Jones. Three of his favourite growth stocks have fallen over the last month and…

Read more »

Investing Articles

I’d use a £10K ISA to try and generate £900 in dividends annually like this!

Christopher Ruane explains how he would invest a Stocks and Shares ISA in blue-chip companies to try and set up…

Read more »

Investing Articles

Here’s how I’d build a second income stream worth £1,228 a month by investing £10 a day!

A second income stream could come in handy later in life. This Fool explains how she’d build one by investing…

Read more »

Investing Articles

5 FTSE 250 stocks I’d buy for a lifetime of passive income

Here's why I think the FTSE 250 could be the best UK stock market index to go for in 2024…

Read more »

Union Jack flag triangular bunting hanging in a street
Investing Articles

Buy cheap FTSE shares, says HSBC

Analysts at HSBC have upgraded their rating of FTSE stocks and reckon the blue-chip UK index could carry on powering…

Read more »

Couple working from home while daughter watches video on smartphone with headphones on
Investing Articles

It could be worth buying the dip for this FTSE 250 stock, down 7% today

Jon Smith spots a sharp drop in a FTSE 250 stock but explains why this could just be a blip…

Read more »