07 December 2017 by lberuti
Today’s session was all about LADLN ( Ladbrokes Coral Group Plc). Its 5-year CDS finished the day 79bps tighter to close at 146bps. Months of speculation around a possible takeover by GVC eventually ended with the company offering 160.9p a share in cash and stocks. The deal will also include Contingent Value Right loan note which could be worth up to an extra 42.8p per share. It will depend on the outcome of the British government’s review on Fixed-odds betting terminals. The upshot of this clause is that the much-feared conclusion is now far less relevant to LADLN’s fortunes than it was before. Because of this uncertainty, LADLN had so far drawn a large short base, and there was obviously capitulation among them. Analysts believe the new combined entity could be BBB-/BB+ rated and could therefore trade in the 120/140bps area. However, the wildcard here is that LADLN’s debt gets taken out and the entity orphaned. In which case, its CDS could experience another large leg tighter.