22nd of August 2010 Author: Johnny Karp
But US positions will have to be resolved first
In a speculative article this week the Reuters news agency considered the online gambling scene following the merger between giants Party Gaming and Bwin Interactive, commenting that 888 and Sportingbet are possible future takeover targets as the industry consolidates, but only once their legal liabilities in the US market are cleared.
The article points out that serious negotiations in the Party Gaming - Bwin merger were only concluded once Party Gaming had secured its $105 million settlement with US authorities.
'A resolution would clear the way for the [888 and Sportingbet] companies to re-enter the lucrative U.S. market should moves to overturn the 2006 legislation succeed, making them more attractive to buyers,' the piece notes, quoting various industry analysts.
Sportingbet would hold the most appeal to potential bidders, analysts said, pointing to its very strong market positioning in Australia and commenting that Ladbrokes and William Hill could be interested in a takeover, along with the Bwin-Party Gaming combination.
KBC Peel Hunt's Nick Batram told Reuters: "There are a lot of people out there who would like to buy Sportingbet. The value in that business is in its very strong market position in Australia. Bwin isn't in Australia to any degree, while Ladbrokes and William Hill are not sizeable in Australia.'
Liberum Capital analyst Richard Taylor highlighted the strength of Sportingbet's sports-betting business, which he said had one of the best gross margins in the sector at around 10 percent. In addition, he said Sportingbet's management was open to a bid, having previously stated up to 55 percent of their cost base could be removed.
Turning to 888, Batram told Reuters that 888's attraction would be the potential for cost savings in a tie-up with a rival online gaming operator, and he speculated that the combined Party/Bwin might be a possible buyer.
"If 888 is still on the market by the time that Bwin and Party do their stuff, it's an obvious one for them because they both use 888 as a supplier," he said, although he accepted that the founding Shaked family, who hold a controlling stake of over 50 percent, might prove unwilling to negotiate at the current price.
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