Ladbrokes in talks with online gaming company
Published 20/12/2010 | 11:02
Bookmaker Ladbrokes today said it was in talks to buy online rival 888 following reports it had offered £240m (€283m) for the company.
The acquisition would allow Ladbrokes to strengthen its online offer, which industry insiders say are lagging behind those of its rivals, according to the Sunday Telegraph.
Ladbrokes, the world's largest betting shop chain, described the discussions as "very preliminary", and said there was no certainty they would lead to an offer.
The newspaper also claimed that other companies including online rival Sportingbet were also in the running to make an offer for 888.
Ladbrokes tried to buy the online gaming company in 2006 for a reported £470m but it is understood that the talks fell through due to concerns that the US Department of Justice (DoJ) might prosecute 888 as part of a crackdown on online gaming.
PartyGaming and Sportingbet paid $105m (€80m) and $33m (€25m) respectively to the DoJ to ensure they are not prosecuted, but 888 is not believed to have secured such an agreement.
The talks with 888 are one of the first major moves by Ladbrokes' recently appointed chief executive Richard Glynn, who is carrying out a full review of the business including how to improve its online offer.
Mr Glynn joined in April from betting firm Sporting Index with a £12m incentive to double the share price of the group, which traces its history back to 1886, has more than 2,700 betting shops and is a market leader in the UK, Ireland, Belgium, Italy and Spain.
888 has made no secret of its intention to join with a rival, following in the footsteps of industry peers PartyGaming and Bwin, which announced they would merge in July.
888 chief executive Gigi Levy said in August: "We look at consolidation as one of the possible routes to realising our full value and feel that longer term this is the direction the industry will take.
"We have always stated that we will look into all relevant deals and expect the recent merger news to accelerate such discussions in the industry."
888's share price slumped by two-thirds in the past year following some disappointing results.
It blamed an industry-wide dip in online poker for a 43pc fall in pre-tax profits to $8.4m (€6.4m) in the six months to June, against $14.9m (€11.3m) last year.
On Friday its shares jumped 12.6pc amid mounting speculation that it was a target for Caesars Entertainment, the US gambling group previously known as Harrah's.