Mixed shares/cash/CVR offer for Ladbrokes Coral (LCL)

[Gengulphus]

Note to moderators and anyone else concerned about on-topicness: Ladbrokes Coral is not currently a HYP share, but has been in the past (in its previous guises as Hilton Group and then Ladbrokes). Indeed, it is definitely in some existing HYPs, namely HYP1 and CHYP1, and so quite possibly others as well.

GVC has made a takeover offer for Ladbrokes Coral, in scheme-of-arrangement form:

https://www.investegate.co.uk/ladbrokes ... 00041823A/

It is quite a complex deal, offering 32.7p cash, 0.141 GVC shares and a Contingent Value Right ("CVR") for each LCL share. The last basically becomes a loan note worth some unknown amount between 0p and 42.8p when that amount is determined, plus interest at 7% for the first 6 months and 1 day, then 9% until it matures (which it does on the later of 18 months after the effective date of the scheme of arrangement, and 6 months and 1 day after the loan notes are issued). The amount that the loan notes will be worth will depend on the result of the government's review of fixed-odds betting terminals, in particular on whatever measures the government enacts limiting the maximum allowed stakes on them, how quickly they're allowed to complete a game, and how many such terminals an operator may operate. If the government doesn't enact any such measures, they will be worth 35p. Otherwise, there's nine pages (on a fair-sized desktop monitor) of text about just how the CVRs work in section 4 of the announcement giving details for anyone who can be bothered to work them out.

A few extra details I have picked up on a skim:

* Unsurprisingly, if the loan notes are determined to be worth 0p, they will not be issued and the CVRs will expire worthless.

* GVC say they'll consider setting up an over-the-counter trading facility or a listing for the CVRs and/or the loan notes they later become, but don't promise to do so. Even if they do so, if it's an over-the-counter facility I rather doubt that many cheap online brokers will actually allow them to be traded, and possibly even to be held - I've certainly had a shareholding rematerialised as a certificate and posted to me when it was delisted because the broker could no longer hold it in electronic form on CREST.

* There are also possible issues about whether the CVRs and/or loan notes will be holdable in ISAs, which are not addressed in the announcement. There will however be a Scheme Document issued in due course, which I would expect to fill in various missing details - in particular, the only things stated about the timetable are that the Scheme Document is expected (but not promised) to be published in February and that it will contain the rest of the expected timetable.

* There will be a mix-and-match option between the cash component and the GVC shares component of the scheme: shareholders will be able to ask for more cash or for more GVC shares, and such requests will be met to the extent that they can be matched to requests in the opposite direction. There won't however be any mix-and-match option between the CVR component and the cash/share components, so LCL shareholders will get no choice about receiving a CVR per LCL share. And of course, the "to the extent" part of the above means that even without the CVR component, there would be no way that an LCL shareholder would be able to guarantee getting all cash or all GVC shares from the takeover, which are of course the best two outcomes from the point of view of not ending up with excessively small holdings / poor-cost-efficiency purchases.

Overall, the scheme is stated to be worth between about 164.4p and 207.2p per LCL share, depending on what the CVRs turn out to be worth, and based on a GVC share price of 934p. The GVC share price is currently 909.5p, so both ends of that range can currently be reduced by 0.141 * (934p - 909.5p) = about 3.5p, making the current range about 160.9p to 203.7p. The LCL share price is currently 176.5p, suggesting that the market is currently assessing the potential CVR value at about 176.5p - 160.9p = 15.6p, or maybe a bit higher to allow for the fact that it's not yet 100% certain that the deal will go through and so what is being valued by the market is a high-but-not-100% chance of getting a CVR, not a full CVR.

All of this will of course produce decisions for pyad to make about HYP1 and for me to make about CHYP1. Speaking for my own decision only, my immediate inclination is that this is one of the rare occasions when CHYP1 should sell. It is well-established that although both HYP1 and CHYP1 are non-tinkering HYPs, that's only in the sense that they don't sell for investment reasons, such as shares having ceased to qualify as HYP shares or holdings having become overweight. They do occasionally sell for 'admin' reasons, i.e. cases where if corporate actions are left to produce their default outcome, the result and/or the process will be unnecessarily awkward for the portfolio owner, and where a judicious sale can avoid that awkwardness. Previous occasions on which they have done so include (not necessarily a complete list):

* United Utilities' 2-stage rights issue in 2003, when HYP1 and CHYP1 were the same portfolio, to get it dealt with quickly and simply. (https://web.archive.org/web/20170213190 ... sort=whole)

* Anglo American's demerger of Mondi in 2007, to avoid two tiny holdings, one of them foreign. This applies to both HYP1 and CHYP1, which were the same portfolio at the time - they first diverged (by a small amount) as a result of unintentionally-different decisions about reinvesting the proceeds. (https://web.archive.org/web/20170213052 ... e#10613470)

* Banco Santander's takeover of Alliance & Leicester in 2008, to avoid the resulting foreign holding of Banco Santander shares. This applies to both HYP1 and CHYP1, which diverged significantly in 2008 as a result of this and two other takeovers and of pyad's decision what to do with them not being available due to his absence from TMF. (https://web.archive.org/web/20170212103 ... sort=whole for CHYP1, which was called HYP1 at the time on the TMF board. Only clear for the actual HYP1 from the fact that it did not contain Banco Santander when pyad posted about HYP1 again after his return.)

* RSA's rights issue in 2014, in which HYP1 (but not CHYP1) sold the rights rather than let them lapse. (Reasons described in https://web.archive.org/web/20170213113 ... sort=whole)

* Vodafone's complex deal with Verizon Communications in 2014, which only affected CHYP1 because it owned Vodafone and HYP1 didn't, to avoid a foreign holding. (https://web.archive.org/web/20161210103 ... 65825.aspx and https://web.archive.org/web/20161210103 ... sort=whole)

In this case of GVC taking over Ladbrokes Coral, there are three 'admin' reasons why I might decide to sell:

* The deal is definitely going to be awkward administratively, due to the CVRs and likely subsequent loan notes. Doing nothing when the takeover occurs will result in a moderately small cash payment then and (assuming the loan note value doesn't come out as 0p) another one later, each of which will require reinvestment.

* The CVRs and/or the likely subsequent loan notes might well create plausibility problems with the idea that CHYP1 is held in an ISA and therefore unaffected by tax issues.

* GVC is incorporated and registered in the Isle of Man, and so GVC shares probably pay dividends under the Isle of Man tax regime rather than the UK one. Not definitely, as there are cases of foreign-registered companies paying dividends under the UK tax regime (RDSB is the one most familiar to HYPers), but if so, that's a definite no-no in my demo portfolios and therefore in CHYP1. (My reasons for that are personal and do not depend on how benign the foreign tax regime is. They are also basically not open to debate - obviously I cannot prevent people debating them, but I can and will ignore any such debate.)

Anyway, there's no hurry to make the decision, and in keeping with CHYP1's basically-non-tinkering nature, I will wait until this takeover becomes rather more certain to go through before deciding whether to sell. But it does look likely based on the above that if it comes to that point, I will decide to sell.

Gengulphus

[Horsey]

I sold out yesterday - what a complex mess.

[Bouleversee]

Gengulphus -

Have you had any further thoughts on this since your Dec. 22 post? My inclination is to sell but don't know when is the best time. With hindsight it probably would have been immediately the takeover was announced.

[Davidsb]

...With hindsight it probably would have been immediately the takeover was announced...

Mine went on 15th/16th January at just over 181p after selling costs - the uncertainty about the CVR payment, the forward Euro exposure, GVC's 'interesting' recent dividend history - all of these mounted up to a feeling that it was time to take the capital gain on LCL and invest elsewhere.

With hindsight, that was a good time to sell LCL shares - although sadly the proceeds went straight back into the market.....

[Bouleversee]

Well done, Davidsb. Sounds as though there was some pretty good foresight there as well. Carpe diem and all that. I daresay whatever you bought will recover in the fullness of time but there may not be a better opportunity to get rid of LCL. I suppose I shall just have to bite the bullet.

[GeoffF100]

Has anyone manged to work out the tax implications for this. I cannot find anything in the documentaion. This company is a valuable tax loss for me, and I do not want to sell, but perhaps that is the simplest thing to do.

[GeoffF100]

Here is the timetable:

https://www.ladbrokescoralplc.com/~/med ... cument.pdf

It looks as though i have until near the end of March to make my mind up. This document contains some tax information too.

[Bouleversee]

Here is the timetable:

https://www.ladbrokescoralplc.com/~/med ... cument.pdf

It looks as though i have until near the end of March to make my mind up. This document contains some tax information too.

16 March if shares are held in a nominee a/c with Selftrade.

[GeoffF100]

16 March if shares are held in a nominee a/c with Selftrade.

The last day of trading in Ladbrokes Coral is said to be 29 March 2018. Are Selftrade suspending trading before that, or is that Selftrade's deadline for making an election? The GVC share price is currently 923.33, which is substantially more than 873, so it looks as though nobody in their right mind will want the cash in preference to the shares, which suggests that nobody will get any more shares either.

[GeoffF100]

I have read the document in detail, and extracted out the relevant information. I have also worked out some numbers for my Ladbrokes Coral (LCL) holding, which dates back to the Hilton days. I received the proceeds of the Hilton disposal as a dividend, which explains the large capital loss. This share may be useful to me as a future tax loss. I hope this will be helpful to others who, like me, are non-tinkers or fancy being offshore betting barons. If GVC continues to grow at the rate that it has done in recent years, my tax loss could soon disappear, but I will not be unhappy about that.

Data for my Holding this Morning (23/02/2018)

LCL share price = 167.70p
Market Cap = £3.2bn
Forecasts: Yield = 3.5% and P/E = 14.1

For my (not very baronial) 2,116 shares:
Base cost = £8,570.78
Current value = £3,558.53
Capital loss = £5,012.25

GVC share price = 917.50p
Market Cap = £2.8bn
Forecasts: Yield = 3.5% and P/E = 16.3

Timetable

https://www.ladbrokescoralplc.com/~/med ... cument.pdf

GVC General Meeting 8 March 2018

iWeb election by 21 March 2018 23:59

Latest time for receiving elections: 26 March 2018 13:00

Last day of dealings in LCL: 27 March 2018

Effective Date: 28 March 2018

First dealings in New GVC Shares 29 March 2018

Cash credit and despatch of CVR (Contingent Value Rights) certificates within 14 days of the Effective Date

Long stop date: 30 June 2018 (after which regulatory changes do not apply to the deal)

What I am Likely to Get

0.141 New GVC Shares + 32.7 pence in cash + contingent entitlement of up to 42.8 pence, plus an upward adjustment for the time value of money.

I should get 0.141 * 2,116 = 298.356 New GVC shares

At the current price, the value of 298 New GVC shares is 298 * £9.175 = £2,734.15

I should also receive £0.327 * 2,116 = £691.93 in cash

The value of the shares at the current price plus cash received is £2,734.15 + £691.93 = £3,426.08

The current LCL premium to this (i.e. the expected value of the CVR) is £3,558.53 - £3,426.08 = £132.45

(This is 3.7% of the current value, or 6.26p per share)

The expected value of the cash plus CVR is £691.93 + £132.45 = £824.38

(23.17% of the current value of the LCL shares)

The maximum possible value of the CVR is 42.8 * 2,116 = £905.65

The maximum possible value of the cash plus CVR is £691.93 + £905.65 = £1,597.58

(44.89% of the value of the LCL shares)

UK Tax Treatment

“A UK Holder’s base cost in his or her (or its) Ladbrokes Coral Shares should be apportioned between the three components of the consideration received by that UK Holder by reference to the respective market values of the New GVC Shares, cash and CVRs received by him or her (or it) under the Scheme as at the Effective Date.”

“It is intended that further information will be provided to Scheme Shareholders in relation to the appropriate apportionment methodology, taking account of the market values of each New GVC Share and CVR, as soon as reasonably practicable after the Effective Date.”

“The Loan Notes should constitute non-qualifying corporate bonds in the hands of UK Holders within the charge to UK capital gains tax. To the extent, therefore, that such a UK Holder receives Loan Notes in respect of his or her (or its) CVRs and has not made an election under section 138A(2A) of the TCGA, that UK Holder will not be treated as having made a disposal of their CVRs. Instead, the Loan Notes should be regarded as the same asset as the CVRs and as acquired at the same time and for the same consideration as those CVRs.”

“UK resident individuals will be subject to income tax in respect of any interest received by them in respect of their Loan Notes and such income will be treated as the top slice of that individual’s income.”

“The repayment or prior disposal of Loan Notes by a UK Holder within the charge to UK capital gains tax may, depending on their individual circumstances (including the proportion of the UK Holder’s base cost in his or her (or its) holding of Ladbrokes Coral Shares apportioned to the CVRs and rolled over into the Loan Notes and the availability of any exemptions, reliefs and allowable losses), give rise to a liability to UK tax on chargeable gains.”

CGT Calculations

The capital loss apportioned to the expected value of the cash and CVR is 0.2317 * £5,012.25 = £1,161.

The capital loss apportioned to the maximum possible value of the cash plus CVR is £2,250.

Mix and Match

Valid Mix and Match Elections will be satisfied (subject to the other valid Mix and Match Elections) on the following basis:

for every 32.7 pence in cash: 0.0374570446735395 New GVC Shares

or

for each 0.141 New GVC Shares: 123.093 pence in cash

* Calculated as 32.7 pence divided by 873 (being the Closing Price of a GVC Share on the Last Practicable Date), which equates to 0.0374570446735395 New GVC Shares.

“The Mix and Match Facility will not change the total number of New GVC Shares to be issued by GVC or the total cash consideration to be paid pursuant to the Acquisition. Accordingly, elections made by eligible Ladbrokes Coral Shareholders under the Mix and Match Facility for New GVC Shares will only be satisfied to the extent that other eligible Ladbrokes Coral Shareholders make equal and opposite elections under the Mix and Match Facility.”

The current GCV share price is currently higher than 873. Nobody should opt for more cash at that price. However, the GVC share price could fall below 873. Since the last date for elections for shareholders on the register is later than iWeb’s last date, it is safest to opt for the fixed allocation, which I have done.

Trading in CVRs and Loan Notes

“GVC is considering seeking an over the counter trading facility or listing for the CVRs and/or
the Loan Notes. A further announcement in relation to such trading facility will be made in due
course, but there can be no guarantee that any such trading facility or listing will be obtained.”

It is not clear what will happen to shares in a nominee account, still less an ISA. It is worth noting that there is no stamp duty in the Isle of Man (or corporation tax, CGT or dividend withholding tax, for that matter). If you have a large holding in an ISA, it might not be too expensive to sell it and use the proceeds to buy GVC shares. Not non-tinkering as Pyad intended it, but it achieves much the same effect.

[GeoffF100]

I do not expect that the government will have made its mind up about the Fixed Odds Betting terminals by the end of this financial year. Receiving the CVRs should not count as a disposal for CGT purposes:

"HMRC have confirmed that each CVR should be treated as an earn-out right for the purposes of section 138A of the TCGA. To the extent, therefore, that a UK Holder receives CVRs in exchange for his or her (or its) Ladbrokes Coral Shares and does not hold (either alone or together with persons connected with him or her (or it)) more than 5 per cent of, or of any class of, shares in or debentures of Ladbrokes Coral, that UK Holder will not be treated as having made a disposal of Ladbrokes Coral Shares. Instead, the CVRs should be treated as the same asset as those Ladbrokes Coral Shares, and as acquired at the same time and for the same consideration as those shares."

The only disposal in this financial year should be the cash element, i.e. £691.93 in my case. The corresponding capital loss in my case would be £5,012.25 * £691.93 / £3,558.53 = £974.60 at the current LCL share price. I should be able to work out this loss accurately when I know the price of the LCL shares when they cease trading.

[Bouleversee]

Geoff - I hesitate to jump in because I am no tax expert but since nobody else is doing so (Geng. where are you?) I'd like to query your cgt assumptions and the relevance of the value of LCL shares when trading in them ceases. Isn't it the GVC share price which is relevant and will the cash be the only constituent in the cgt calculations? Quite frankly, if I held these shares outside an ISA or SIPP I'd be selling in the market to avoid all the complexities and the pie in the sky. At current prices wouldn't you get rather more if you did so than the cash and share offer value plus the 4p dividend? And you are not going to end up with a very large holding at the end of the day (unless you apply for and get more shares, which I don't think you have posited, and may be left with a small amount of cash you don't know what to do with. The CVRs may amount to nothing and I'd happily sacrifice any value to save the headaches of the tax calculations outside an ISA.

Even holding in an ISA, I'd prefer to sell; it's just a question of when. My son has only 1005 shares (fortunately in his ISA) and the amount of GVC shares he would end up with is not worth having and there must be something better to do with one's cash than gambling on gambling shares. All shares are enough of a gamble as it is.

Good luck with whatever you decide.

[GeoffF100]

I will do my best to step into Gengulphus's big shoes here, and try to explain the CGT calculation more clearly. In theory, I bought my LCL shares for £8,570.78. Their value yesterday morning was £3,558.53, which is a capital loss of £5,012.25. If the takeover had happened at that point, I would have received:

(1). 298 New GVC shares with a value of 298 * £9.175 = £2,734.15

(2). £0.327 * 2,116 = £691.93 in cash

(3). CVRs which would be worth £3,558.53 - £2,734.15 - £691.93 = £132.45

According to HMRC rules, my base cost of £8,570.78 is apportioned in the ratio of the current capital values of (1), (2) and (3), i.e. £2,734.15, £691.93 and £132.45 respectively. The respective base costs are:

(1). GVC: £8,570.78 * £2,734.15 / £3,558.53 = £6,585.25

(2). Cash: £8,570.78 * £691.93 / £3,558.53 = £1,666.53

(3). CVRs: £8,570.78 * £132.45 / £3,558.53 = £319.01

The respective capital losses are:

(1). GVC: £2,734.15 - £6,585.25 = £3,851

(2). Cash: £691.93 - £1,666.53 = £974.60

(3). CVRs: £132.45 - £319.01 = £186.56

The GVC shares and the CVRs should be unrealised capital losses in this tax year, because HMRC has confirmed that the CVRs count as the same share class as LCL. The cash, however, does count as a capital disposal of the LCL shares, within the current tax year. The net result is that I can add £974.60 to my CGT allowance for this tax year, which is good. The downside is that the tax loss available for use in future years is reduced.

The CVRs will eventually become loan notes, which pay interest, and in their turn eventually expire. When the CVRs become loan notes, there will be an unrealised capital gain or loss, which is carried over to the loan notes. There will be an additional unrealised capital gain or loss when holding the loan notes, because they will be non-qualifying bonds. The associated capital gain or loss will be realised when the loan notes mature.

Selling my LCL shares would not make any sense. If I did sell them, I would be realising a larger capital loss than I would if I just held them, which is good in principle. This capital loss could be allowed against other capital gains during this tax year, but that would not help me very much. The problem is that I would deprive myself of a holding in GVC shares with a big paper capital loss. This could be very useful to me, in a future tax year, if one or more of my shareholdings is taken over for cash. If that happens, I can sell the GVC shares to offset the capital gain, and avoid paying CGT at whatever rate applies at that time.

I hope that clarifies matters. It is a lot of work for a tiny proportion of my portfolio, but it keeps me amused.

[GeoffF100]

It is worth adding that GVC shares currently have a beta of 0.51:

https://www.reuters.com/finance/stocks/overview/GVC.L

That implies that these shares are about half as risky as a typical FTSE 350 share, but that is not necessarily the whole story. If you look at the chart tab, you will see that GVC has had fantastic growth over the last five years. 360% in total return terms, if I remember correctly. Unfortunately, the future growth of company earnings have a very low correlation with past earnings growth. Nonetheless, the valuation is not bad, and this is only a small holding for me. I do not know what the future prospects for this company are, and I am sure that the market knows better than me. Non-tinkering is a good tax move for me, and adds a little more diversification to my portfolio.

[Gengulphus]

First, a quick word about my absence from this thread: I'd made a simple mistake about maintaining the list of threads I'm monitoring - specifically, my policy is to put threads on to that list when they first come to my attention provided I think there's a reasonable chance I'll be interested in them (*), and to take them off again if they've gone for more than a week without any new contributions to them and I don't think I'll want to revisit them myself. In this case, I seem to have inadvertently ignored the second part of that and removed the thread at some point in the nearly-two-months-long gap in the thread between just before Christmas and about a week ago... :-(

Secondly, I have discovered the problem and put this thread back on to the list now. Not as a result of any of the "where are you?" type comments here, of course - I didn't even see them until afterwards - but because I got around to dealing with Halifax's corporate action communication asking me for my choice between the basic offer, getting as many GVC shares as possible, or getting as much cash as possible (**). So I went to remind myself of my previous thoughts on the matter, in my OP for this thread, and found that the thread wasn't as easy to get to as it could have been because it wasn't on the list... This is a good example of the main reason why I run GDHYP and CHYP1 as small-amounts-of-real-money portfolios rather than purely 'paper' ones, by the way - my experience of trying to run some 'paper' portfolios in the early 2000s was that I inevitably ended up neglecting to deal with corporate actions at some point, not discovering the negligence until a year or two later, and then pickering endlessly about what I would have done - a decision that simply cannot be made at that point without significant hindsight potentially being involved... :-( Having real money involved both means that Halifax let me know about the need for a decision and presents me with fait accompli consequences if I nevertheless fail to make one.

Thirdly, I see that GeoffF100 has ably substituted for me ;-) and I really have little to add to what he's said - about the only thing is that I would emphasise that the numbers in his post will almost certainly not be the right ones to use for the CGT calculation. I.e. treat his calculations as an illustration of the right way to do the calculations, not of the right numbers to feed into them. In particular, the right numbers to feed into the apportionment calculation that divides up the base cost of the LCL shares into separate base costs for the GVC shares, the cash and the CVRs are the base cost of the LCL shares and the market values of the GVC shares, the cash and the CVRs on the first trading day after the takeover scheme comes into effect. Of those, the base cost of the LCL shares is knowable now provided one doesn't buy or sell them (or otherwise acquire or dispose of them, e.g. by gifts) before that trading day, and the relevant market value of the cash is just the amount of cash, which is knowable now if that's the case and in addition one takes the basic offer without using either mix & match option. But the relevant market values of the GVC shares and the CVRs simply aren't knowable even in principle until that trading day, and in practice it may be some time after that. And actually, in some possible circumstances I'm not certain how one ought to determine an exact figure for the relevant market value of the CVRs at all, given that the scheme document says "GVC is considering seeking an over the counter trading facility or listing for the CVRs and/or the Loan Notes. A further announcement in relation to such trading facility will be made in due course, but there can be no guarantee that any such trading facility or listing will be obtained." - though in practice, I suspect that HMRC will end up accepting any reasonable estimate.

That does mean that one cannot calculate the separate base costs for the GVC shares, the cash and the CVRs until after the takeover scheme has come into effect. And since any decision about which option to take in the takeover needs to be made before the takeover scheme comes into effect, any CGT figures one uses in arriving at such a decision can only be estimates. That provides the explanation for the relevance of the LCL share price that Bouleversee questioned: the LCL share price is indeed not relevant to the eventual CGT calculations, but what GeoffF100 used it for was to estimate the market value of the CVRs and thus arrive at estimates of what the results of those calculations will turn out to be. Such estimates are less than ideal as a basis for his decision - he'd doubtless prefer the actual figures - but they're the best that is available (even in principle) when he has to make the decision.

Fourthly, I have to thank GeoffF100 myself for his posts, because they point out the relevance of the market value of the CVRs to the CGT calculations and the distinct possibility that it will be hard to ascertain, especially in the immediate aftermath of the takeover scheme (which covers the rest of the current tax year). That adds a further 'admin' reason for selling before the takeover to the three I listed in my OP:

* The deal is definitely going to be awkward administratively, due to the CVRs and likely subsequent loan notes. Doing nothing when the takeover occurs will result in a moderately small cash payment then and (assuming the loan note value doesn't come out as 0p) another one later, each of which will require reinvestment.

* The CVRs and/or the likely subsequent loan notes might well create plausibility problems with the idea that CHYP1 is held in an ISA and therefore unaffected by tax issues.

* GVC is incorporated and registered in the Isle of Man, and so GVC shares probably pay dividends under the Isle of Man tax regime rather than the UK one. Not definitely, as there are cases of foreign-registered companies paying dividends under the UK tax regime (RDSB is the one most familiar to HYPers), but if so, that's a definite no-no in my demo portfolios and therefore in CHYP1. ...

which is that letting the takeover proceed will almost certainly complicate my CGT planning for this tax year by introducing uncertainty into it. I'm pretty sure that it's only minor complication/uncertainty, since the real-money versions of GDHYP and CHYP1 are so small compared with my main investments, but basically I'm not prepared to allow GDHYP and CHYP1 to introduce any unnecessary complications into my tax affairs, not even mild ones.

So finally (apart from the footnotes below), that means that I've come to a decision about the CHYP1 holding of Ladbrokes Coral: sell it. And I did so a short while ago, at a price of 165.55p. A pity that's over 10p below the price of 176.5p that could have been achieved at the time of my OP, of course, but that's spilt milk, and while I could have tried hanging on for a few more weeks in the hope of getting a better price, there's no guarantee I would succeed, I might end up doing the opposite, and any effort put into making short-term trading decisions about the timing of the sale would both run contrary to an obvious motivation to run a no-tinkering-except-for-admin-reasons portfolio like CHYP1 and be effort I have better uses for!

I will report the details of the sale, say how I plan to reinvest the proceeds and ask for feedback about my planned purchase(s) in a future post. It will be in a new thread mainly about CHYP1 (so not this thread) and it probably won't be until at least a few days have passed, quite possibly longer - it's by no means my highest priority at present, and even if it were, assessing CHYP1's current state and the HYP candidates the market currently has available would take a while!

(*) Incidentally, note that means that threads which look uninteresting to start with never get on to the list at all. For instance, threads started with just a link to (and quote from) a TMF article almost certainly won't get on to it, nor will threads started with just a link to (and quote from) an RNS whose significance to the company's future fortunes isn't obvious. A prime example of the latter is the fairly common RNSes from pharmaceutical companies announcing that an obscurely-named drug they're developing for the treatment of an obscurely-named cancer has reached an obscurely-named stage in the clinical trials process - I will simply have no idea how major the drug is in the company's offerings, nor whether the use being developed is major or minor, nor whether the process stage reached is one of great significance or just a minor point to be noted, and I have neither the time nor the inclination to research those points every time such an RNS appears... Adding some comment of your own about why you think the TMF article or RNS is worth a HYPer's attention will improve the chances of getting it on to my to-be-monitored list considerably. (And also comply better with copyright law, by the way - "fair use" short quotes are permitted for purposes such as commenting on, criticising or reviewing them, so it's a good idea to actually do some commenting, criticising or reviewing!)

(**) As a small addition to Bouleversee's information that Selftrade's deadline is March 16th, Halifax's is March 21st.

Gengulphus

[Bouleversee]

Gengulphus -

I'm not surprised you have sold. Would you still have done so if the shares had been in in ISA or SIPP?

[GeoffF100]

But the relevant market values of the GVC shares and the CVRs simply aren't knowable even in principle until that trading day, and in practice it may be some time after that. And actually, in some possible circumstances I'm not certain how one ought to determine an exact figure for the relevant market value of the CVRs at all...

As quoted above, the offer document says:

“It is intended that further information will be provided to Scheme Shareholders in relation to the appropriate apportionment methodology, taking account of the market values of each New GVC Share and CVR, as soon as reasonably practicable after the Effective Date.”

It is clear that GVC considers that the market value of the CVRs will be known, even if there is no market in them. Perhaps they will apply the calculation that I have already given with the values of the LCL shares and the GVC shares at the appropriate time(s). GVC does not appear to have offered guidance on the precise times to be used.

Here are some dates from the timetable:

* GVC General Meeting 8 March 2018

* Last day of dealings in LCL: 27 March 2018

* Effective Date: 28 March 2018

* First dealings in New GVC Shares 29 March 2018

We do not know for sure that the takeover will take place until after the General Meeting.

The Effective Date (on which the takeover formally takes place) is very near the end of the financial year, and there may well be a significant delay in GVC reporting the relevant market values. The report may also be very hard to find. The offer document was not clearly flagged up on either the Ladbrokes Coral website or the GVC website. I do not want to do my end of financial year trading in a big hurry.

I plan to use the price of the LCL shares and GCV at the close of trading on 27 March 2018, for my initial CGT calculations. I expect that the resulting value for the capital loss attributable to the cash element will be accurate enough to guide my end of year CGT sales. I will then revise my calculations when the official values are available. It does not matter much if I am left with a few pounds of unused CGT allowance, or end up paying tax at 10% on a few pounds over-run. Having to rush my CGT sales on the last day of the financial year would be worse.

[Gengulphus]

I'm not surprised you have sold. Would you still have done so if the shares had been in in ISA or SIPP?

If it had still been in one of my demo portfolios, just somehow in an ISA or SIPP (which they aren't and IMHO cannot reasonably be), probably - as my OP concludes "Anyway, there's no hurry to make the decision, and in keeping with CHYP1's basically-non-tinkering nature, I will wait until this takeover becomes rather more certain to go through before deciding whether to sell. But it does look likely based on the above that if it comes to that point, I will decide to sell."

One point that I haven't explicitly made before, but is one of my reasons behind that sort of waiting for takeovers to become more certain to go through, is the possibility of a rival offer emerging and a bidding war developing. Two months on from the original announcement, with the exact conditions, etc, of the current offer now having been public for a couple of weeks now and only about a month to go on its expected timetable, I would have expected any rival offeror to have at least expressed an interest by now - so I think there probably isn't one!

If it had been in my main HYP, which is in my ISAs and SIPP to the limited extent that it fits, the fact that it is a tinkering one means that I would have to take my views on GVC's merits as a HYP share into account, not just those on the admin issues. It would take more of my time than is worthwhile (for me, that is!) for me to assess GVC properly as a HYP share, but http://www.gvc-plc.com/html/investor/dividend.asp doesn't look like the sort of consistently-growing dividend history I'm generally after!

Gengulphus

[Bouleversee]

Thanks, Gengulphus. Along the lines of my own thinking. I'd better get on with it.

[GeoffF100]

I looks as though I might be the last holder here. Personally, I am not greatly impressed by a history of rising dividends. That has to be supported by a history of rising earnings, but there appears to be no correlation between past and future earnings growth, see for example:

https://www.finsia.com/docs/default-sou ... =28ab393_2

Here is a graph of earnings and revenue for GVC, which tells the story of a rapidly growing company:

https://simplywall.st/stocks/gb/consume ... erm-trend/

Here is a more detailed view of the financial history:

https://markets.ft.com/data/equities/te ... ?s=GVC:LSE

The combined group will be a FTSE 100 company, and I expect that the rapid growth will slow. GVC is forecast to pay a dividend, and the company may well become a cash cow. The popular choices on this board tend to either be cash cows or companies in trouble, but that is not always obvious, of course. In the long run, GVC should be a stable revenue earner paying reasonable dividends. The low beta suggests low risk, but that does not necessarily reflect regulatory risk, for example.

I do not see any great problems here.