BWIN-PARTY - more meat on the rumour bones
No sooner than we report on the big Poker - Sports merger than the Sunday Times get into the details. Smaller companies need to be worried. They need to get bigger, quicker. The new company would be massively profitable and able to take on the US when it opens up.
PRTY is a good partner for BWIN as it will provide a credible entry into the US will no legal problems and will make them the surefire number one in Europe and then able to exploit any new EU market that opens up.
PRTY get their hands on a very good sportsbetting outfit with some excellent sponsorship ties ups and good brand recognition.
The deal certainly looks closely that I would first have guessed. This might explain the lack of action with the likes of Sportingbet. BWIN obviously have bigger fish to fry.
A lot of this article is old news to Netbetblog readers but the fact remains - everyone is talking to everyone. This is a conversation between the two of the biggest names.
Poker giants show their hand over £2billion merger [Sunday Times]
PARTYGAMING, the online poker group, is in merger talks with Bwin, an Austrian rival, in a deal that could create a £2 billion internet gambling giant.
The two sides have been holding on-off talks since the summer. PartyGaming, led by chief executive Jim Ryan, is expected to be asked by the Takeover Panel to clarify the position before the market opens tomorrow morning.
A merger would mark another chapter in PartyGaming’s colourful history. Four years ago the group, which attracts 79m players a day, floated when the craze for internet poker was booming. It was given a value of £5 billion and its four founders raised almost £1 billion from the sale of shares.
The quartet were Vikrant Bhargava, a marketing expert, Anurag Dikshit, IT guru, and husband-and-wife team Russ de Leon and Ruth Parasol. The latter attracted press attention because of her former career running telephone sex lines.
The flotation led to huge controversy because PartyGaming warned in its prospectus that America’s Department of Justice “considers that companies offering online gaming to US residents are in violation of existing federal laws”.
America was the group’s biggest market, accounting for nearly 90% of its revenues. The company struggled to assemble a board and was forced to offer big share packages to attract people. Michael Jackson, the former chairman of Sage, the software group, was given a £1.5m fee to become chairman.
A year after floating, the company suffered a huge setback when America made internet gambling illegal. Groups including PartyGaming closed their American operations and lost huge amounts of revenue.
Speculation about consolidation in the online gaming sector has been rife in recent months. A tie-up between PartyGaming and Bwin would be logical given the former’s ambition to grow its presence in sports betting, an area where the Austrian group has particular strength.
PartyGaming, based in Gibraltar, is best known for offering poker and casino games. It seems likely that if the two businesses can agree a tie-up, the deal would be structured as a merger of equals.
One source cautioned that discussions were at an early stage and there was no certainty that a deal would be agreed. “Everyone in the industry is talking to everybody else,” said the source.
Shares in PartyGaming closed on Friday at 256Åp, valuing the business at £1 billion. Bwin, which is listed on the Vienna stock exchange, has a market value of €1.3 billion (£1.2 billion).
In April this year, Party Gaming agreed a settlement with America’s Department of Justice to ensure that it would not face prosecution over its activities in the United States. It agreed to pay $105m (£65m) as part of the arrangement.
Dikshit had previously made his own agreement with the department, arranging to pay $300m after pleading guilty last December to an online gambling charge. He sold the bulk of his remaining 28% stake in PartyGaming in October.
Analysts believe that gambling groups including London-listed 888 Holdings and Sportingbet as well as Sweden’s Unibet, have all been examining possible deals.
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