GALA Group, the private equity-backed bingo and casino operator, is poised to announce a £2 billion-plus takeover of Coral Eurobet, the bookmaker, to create a £4 billion gambling behemoth, The Times has learnt.

The acquisition, which could be announced as early as tomorrow or over the weekend barring a rival bid, is expected to be the first step towards a stock market flotation for the enlarged group in 18 months to two years — a move that would propel Gala into the FTSE 100.

The deal, worth between £2.1 billion and £2.2 billion including debt, will supersede plans by Coral’s private equity owners, Charterhouse, to float the business in an £800 million initial public offering. The valuation represents a multiple of about ten times Coral’s earnings before interest, tax, depreciation and amortisation.

The sale will crystallise a fresh multimillion-pound fortune for Vaughn Ashdown, the Coral chief executive and a former professional bodybuilder. Mr Ashdown has already earned several million pounds from the sale of Coral to Charterhouse for £860 million three years ago and a subsequent refinancing.

Mr Ashdown is expected to stay on for up to a year to oversee the integration of the two businesses, at which point he will leave and hand over the reins to Wilf Walsh, the Coral managing director. Mick Mariscotti, finance director, will also stay for a handover period but Coral’s chairman, Philip Bowman, will leave immediately.

The enlarged group will be led by the current Gala management headed by John Kelly, chairman, and Neil Goulden, chief executive. Mr Goulden knows the sector well, having previously spent 14 years at Ladbrokes, the bookmaking arm of Hilton Group.

Coral’s 1,260 betting shops, together with its internet and telephone betting operations, will become part of a company that has 166 bingo clubs with a total of six million members and 28 casinos in the UK plus two in the Isle of Man and Gibraltar.

Gala was formed in 1997 through a £236 million buyout of Bass’s bingo arm led by Mr Kelly. In March 2000 it was acquired by CSFB Private Equity for £400 million and later that year it bought Ladbrokes Casinos for £235 million. Three years later it was acquired by Candover and Cinven for £1.24 billion.

The fire power for the Coral acquisition was provided in August this year when Permira, another private equity firm, paid £200 million for a 30 per cent stake in Gala alongside Candover and Cinven in a deal valuing Gala at £1.89 billion including debt.

Analysts said that the combined group would be well placed to take advantage of the relaxation of gambling laws although the cost synergies would be limited by the lack of overlap in their businesses.

The only threat to the Coral deal is the possibility of a last-minute knockout bid from a rival private equity firm. CVC is known to have been considering a move.

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