888 and Party Gaming in Merger Talks

**jetset** · 29th October 2006, 05:59 AM

PARTY GAMING AND 888 ONLINE GAMBLING COMPANIES TO MERGE?

US legal situation may have accelerated consolidation in the industry

Online gambling observers woke up with a shock this Sunday as the news broke that several major online gambling companies are considering various merger possibilities as the absence of US business continues to be felt.

The Sunday Times in the UK reported that two of the biggest UK-listed online gaming operators, Party Gaming and 888 Holdings, have held preliminary talks about a possible merger to create a GBP 1.6 billion company.

Both firms have been trying to find a way to cope after sales were hit by the introduction of laws banning online gambling financial transactions in America. Party Gaming, the world�s biggest online poker group, fell out of the elite FTSE 100 group of companies, while 888 Holdings dropped out of the FTSE 250 index. Their shares collapsed when both firms said they would cease trading in America, decimating market values.

Executives from the two companies have recently held exploratory talks to combine their pool of online players, the newspaper reports. It is expected that further talks will be held in the coming weeks. It is one of several options being considered by both companies and their rivals.

One insider told the Sunday Times: �All the players have been talking to each other for weeks. At one stage there were plans for attempting a multi-company merger but it was decided that this would be too difficult and that one merger at a time would be quicker.�

He added: �The biggest problem facing gaming companies is that each one�s pool of players has been dramatically reduced by the removal of the American market. Now when players sign on, there are a lot fewer people to play against, which means even those that are legally allowed to play are finding it less interesting.�

Other firms also trying to find ways to consolidate include Sportingbet, the AIM-quoted company whose former chairman, Peter Dicks, was arrested in America last month, Excapsa, which is also listed on AIM, and Bwin, an Austrian internet betting firm.

The big gaming companies are looking to acquire rivals that have a strong European or Asian presence. For example, Party Gaming has been linked with a deal to buy Gamesys, which is big on the Continent, and Victor Chandler, the bookmaker that has the biggest player base in Asia.

Ten days ago when Party Gaming released its �key performance indicators� for the third quarter, Mitch Garber chief executive, told analysts the company was in talks with several parties. Two weeks ago, Garber told The Sunday Times: �Consolidation is, in my view, the most sensible way to grow the business right now.�

**winbig** · 29th October 2006, 06:20 AM

I think we're going to see more of this.........

On a semi-related note, I watched the newest Garfield movie tonight, and I was shocked to see that 888.com bought some product placement in the movie!

It's only like a 2 second ad, but when garfield was in the hotel watching TV (in London), there was a darts tourney on. Guess who was the sponsor? 888.COM...Go figure. I'm actually surprised the DOJ hasn't made them pull that scene, or at least 888's ad from the DVD.

I can't believe these "kid-friendly" shows/movies/etc are selling out to casinos. Same goes for WB, which licensed the Yosemite Sam character out to 49er Casino.

They'll pull Joe Camel from cigarette ad campaigns, but yet will allow casinos to use cartoon characters for their main theme? Same goes for these credit card companies that use Mickey Mouse on one of their branded cards. (Chase Manhattan I believe)

[/derail]

**jetset** · 29th October 2006, 06:52 AM

You're probably right - it's getting tough out there. Trouble with M&As is that the next word that comes up in the business vocabulary is "rationalisation" and that usually means some poor buggers are out of a job.

The competition for European and Asian business to combat American losses is already keen, but it's going to get really intense going forward, for sure. That could be good news for the player in those regions.

I found it interesting that the newspaper report refers to "merger to create a GBP 1.6 billion company." Compare that to the market value of Party pre- UIGEA and it illustrates just how much devastation Frist et al wreaked on the public companies sector.

**dominique** · 29th October 2006, 03:41 PM

Prohibition inherently causes unethical behavior.

Advertising to children would be gone if there was regulation instead of prohibition.

**Ian_go** · 29th October 2006, 08:35 PM

As I recall reading some months back, Bodog was in talks to have advertising inside a MMOG. These games are the hot new broadcast medium, and not just for advertisers. Recently I asked a well known D&B DJ as to what new releases he was working on. He said he was very happy that one of his remixes will be used as a 2 minute sound bite during a card game inside a MMOG and that this kind distribution will bring him more recognition and money than he could ever hope to get from DJing and selling records. 888, Bodog & PP grew very quickly & one of the reasons was the sheer amount of advertising they did over all channels. Expect to see more from these guys inside a cinema, a gum wrapper or a bar coaster soon!

**winbig** · 29th October 2006, 09:22 PM

Originally Posted by Ian_go

As I recall reading some months back, Bodog was in talks to have advertising inside a MMOG. These games are the hot new broadcast medium, and not just for advertisers. Recently I asked a well known D&B DJ as to what new releases he was working on. He said he was very happy that one of his remixes will be used as a 2 minute sound bite during a card game inside a MMOG and that this kind distribution will bring him more recognition and money than he could ever hope to get from DJing and selling records. 888, Bodog & PP grew very quickly & one of the reasons was the sheer amount of advertising they did over all channels. Expect to see more from these guys inside a cinema, a gum wrapper or a bar coaster soon!

How about having their logo imprinted on top of the cakes inside a urinal? It'd definitely be fitting....

**jetset** · 30th October 2006, 05:07 AM

PARTY GAMING - 888.COM MERGE (Update)

Most online gambling public companies are exploring merger possibilities says industry executive

Further reports on the possible merger of Party Gaming and 888.com were being carried by most UK newspapers today (Sunday) including the Telegraph.

The newspaper revealed that executives across the online gambling sector have been looking at a range of measures to shore up their finances and find a new pool of players to replace those lost. Half of 888 Holdings' revenue came from America, the newspaper reported, while Party-Gaming relied on the US for 75 percent of its revenue.

Mitch Garber, the chief executive of PartyGaming, is on holiday in Israel, but further talks are expected when he returns in a week's time.

The Telegraph claims that the development is something that "most gaming companies are looking at right now." According to an unnamed industry executive. "It seems all gaming companies are talking to each other about all sorts of possibilities."

It is believed that PartyGaming would benefit most from a tie-up with 888, as the latter's casino websites are seen as more resilient and its poker sites are less dependent on large numbers of players, according to analysts.

Since the ban on American online gaming financial transactions was announced a month ago, PartyGaming's shares have fallen by over 70 percent, while shares in 888 Holdings fell by 24 percent.

**jetset** · 30th October 2006, 09:31 AM

888.COM CONFIRMS IT IS CONSIDERING MERGER OPPORTUNITIES (Update)

Gibraltar-based online gambling group confirms media reports

Online gaming firm 888 Holdings Plc confirmed today (Monday) it has held talks with third parties since the United States banned Internet gambling financial transactions at the end of September.

The confirmation follows weekend media reports in the United Kingdom that 888.com and Party Gaming.com were holding peliminary talks about a possible merger.

In a statement 888 said it had held "various preliminary discussions with third parties following suspension of its U.S. activities," adding that there was no certainty that the discussions would proceed to an offer being made for the company or any other action.

Earlier reports said executives from the two companies - which would have a joint market capitalisation of almost GBP1.6 billion ($3 billion) - expected to hold further talks in the coming weeks as gaming firms consider options to combine their online pool of players in the wake of the U.S. changes.

PartyGaming was not immediately available for comment.

**cipher** · 30th October 2006, 03:24 PM

PARTY GAMING and 888 in a merger. You'd might as well call that merger a form of the Gladiator Games. It would be very interesting to see who would screw who the fastest. But who knows with any luck maybe they'd both die off and the industry would be much the better for it.

Have a good one.