Independent, The (London): Bookmaker Coral ready to gamble on pounds 800m float

Coral Eurobet is preparing to cash in on the stock market's febrile excitement for gambling stocks with an pounds 800m float that will bring all three of the country's biggest bookmakers into the public arena.

Vaughn Ashdown, the chief executive, said a flotation would mark a new era in the strategic development of the company, which has been owned by Charterhouse, the private equity group, since September 2002. Speaking from holiday yesterday, Mr Vaughn said: 'In three years with Charterhouse we have more than doubled the value of the company. The management would like to have the flexibility that a stock-market quote gives you.'

Mr Vaughn, who became chief executive three years ago, and the finance director, Mick Mariscotti, share a 16 per cent stake in the business along with up to 70 other managers at the company. The team will therefore split a stake worth about pounds 128m.

Last year, Coral made operating profits of pounds 145m, but with just 10 weeks left of its current financial year analysts are confident it will post profits ahead by at least 10 per cent. Coral formally asked bankers from Lehman Brothers to advise it on a float last week.

Lehmans has been involved in all of Coral's most recent transactions, including the sale of the business by Morgan Grenfell Private Equity to Charterhouse three years ago for an enterprise value, including debt, of pounds 860m. Today's enterprise value for Coral is about pounds 2bn. The sale of Coral to Charterhouse disappointed some rival bidders including Rank Group.

The improvement in Coral's fortunes since the Charterhouse deal means the company's value, and the scale of its debt financing, will put it beyond trade buyers such as Rank this time around. While other private equity buyers may still be interested in buying Coral, a float is the most likely option.

As internet-based gambling has taken a bigger share of the market, traditional bookmaking shops have started to look vulnerable, in particular the smaller chains. William Hill, the UK's biggest bookmaker, bought Stanley Leisure's bookmaking chain in May, and Ladbroke snapped up the family-owned Jack Brown chain last month.

Acquisitions are part of Coral's strategy and its firepower for more deals is likely to be strengthened with the ability to tap City shareholders for funds. As the smaller of the big three bookmaking chains, Coral has more room for bigger acquisitions than William Hill or Ladbrokes, which is part of the Hilton Group.

Bookies have been boosted by the popularity of fixed-odds betting terminals in their shops, which allow punters to bet on the outcome of electronic roulette wheels. The big bookies have also used their marketing muscle to develop online gaming businesses.