Dermot Desmond has written to Ladbrokes shareholders on the company's proposed merger with Coral, saying that the transaction is not a good deal for them.

Mr Desmond, a substantial shareholder in Ladbrokes, said that they should instruct the Ladbrokes board to properly evaluate all strategic options open to it before committing to what he says is the "wrong deal".

He called on shareholders to vote against it at the company's general meeting on November 24.

In July, the two bookmakers announced a deal to merge, creating a £2.3 billion business which would be Britain's largest high-street betting group and better equipped to compete in the growing online market.

Betting companies are responding to higher tax bills in the UK and tighter regulation of the industry.

The Irish business man has been a shareholder of Ladbrokes for nine years and, in 2013, he sold his Betdaq exchange business to the company and entered into a technology joint venture with them. 

"I believe I am well placed to comment on the proposed transaction," he told shareholders. 

In the letter, Mr Desmond said that Ladbrokes has a great brand but, unlike Coral, has failed to migrate its customers online.

"Ladbrokes needs a new management team to achieve this. However giving away half your company and taking on over £800m of debt is a very expensive way to recruit a quality management team," he wrote.

"This is not a good deal for Ladbrokes shareholders," Mr Desmond concluded in his letter. 

"Shareholders should vote against it at the General Meeting on 24 November and insist that an independent committee of the board, with appropriate advice from an independent investment bank, review all the strategic options open to Ladbrokes in a very active M&A market," he added.

Ladbrokes operates over 2,200 betting shops in the UK. The Gala Coral Group is owned by a group of private equity companies including Apollo, Anchorage and Cerberus. It operates 1,800 Coral betting shops across the UK.