Investors are placing bullish bets on Ladbrokes (LAD) this morning, sending its shares a handsome 12% higher. This comes after the UK’s CMA watchdog ruled provisionally that the £2.3bn merger with private equity-owned Gala-Coral would require the disposal of 350-400 betting shops to satisfy anti-trust concerns and receive regulatory clearance.

On the surface a bullish reaction may appear to be at odds with the new merged entity being forced to sell 1 in 10 shops – and thus do less business. But with the proposed tie-up between the UK’s #2 and #3 bookmakers (4,000 outlets combined) already leapfrogging market leader William Hill (2,400), a fair number of disposals was always going to be on the cards to ensure punters still have a choice on the high street.

A LAD spokesman saying the announcement was ‘significant’ suggests the ruling may in fact be less onerous than the company was expecting. Markets would appear to concur, pleased that it is unlikely to prevent an overtaking of its fiercest rival. It also represents a step towards some big savings via synergies and elimination of surely numerous duplicate cost centres. A deadline of 13 June has been given for suggested remedial action. The shares have broken out of a tight 115-122p range to trade 2-month highs and the odds of hitting 2016 highs of 140p and an 18-month best of 147p have surely shortened.

Mike van Dulken, Head of Research, 20 May