DUBLIN, Nov 18 (Reuters) - Irish billionaire Dermot Desmondhas written to fellow shareholders in British bookmakerLadbrokes to urge them to reject a proposed merger withrival Gala Coral at a shareholders meeting next Tuesday.
The two bookmakers agreed an all-share merger in July,creating a 2.3 billion pound ($3.5 billion) betting group thatwould seek to build on its dominance of Britain's high streetsto expand its online business.
In a letter to shareholders Desmond, majority shareholder inScottish soccer club Celtic, said Ladbrokes needs a newmanagement team to shift more of its customers online, but saida merger was not the right way to achieve this.
"Giving away half your company and taking on over 800million pounds of debt is a very expensive way to recruit aquality management team," Desmond said in the letter. "The realwinners in this transaction are the Coral shareholders."
Ladbrokes promoted Jim Mullen, the head of its digitalbusiness, to the chief executive's role in March, reflecting theneed to compete harder in the expanding online market.
In the letter, Desmond says that Ladbrokes shareholderswould suffer a 66 percent reduction in dividends and says amerger with Coral would not provide it with the proprietarytechnology platform he believes it needs.
He said he believes synergies will be difficult to deliveras Coral and Ladbrokes would maintain separate brands and twotrading teams.
Ladbrokes was down 0.4 percent on Wednesday at 1.09 Britishpounds per share at 1415 GMT compared with 1.24 pounds when thedeal was announced on July 24.
A spokesman for Desmond said that he had a "substantialshareholding" in Ladbrokes. A Ladbrokes spokesman said Desmondappeared to hold at least 1 percent but possibly double that.
Ladbrokes said in a statement that it was not surprised byDesmond's views, but remained "confident that shareholders seethe attraction of the proposed deal."
($1 = 0.6575 pounds) (Reporting by Conor Humphries; Editing by Keith Weir)
