888 on radar as takeover fever spreads

 
City A.M. Reporter
ONLINE gaming firm 888 said yesterday it had been contacted by rivals looking for takeover opportunities in the wake of last week’s tie-up between Austria’s bwin and PartyGaming.

The merger between bwin and PartyGaming will create the world’s biggest internet gambling firm and puts pressure on other companies in the sector to strike deals or risk losing out as online gambling laws are relaxed across the world.

“This puts us in a position in which we are one of the best assets in the field – we got a few phone calls immediately from various people. Everybody in the industry is looking and saying ‘who is the best one to merge with if we need to?’,” chief executive Gigi Levy said. “We don’t see anything happening imminently but there’s definitely expressions of interest.”

KBC Peel Hunt analyst Nick Bartram said 888 must strike a deal in order to fully realise value in its business, in light of its weak trading performance in recent quarters. “The pressure is now on for others to pursue consolidation or risk being left behind. For 888 consolidation looks imperative and, given the bottom line performance, the group could be pursuing this from a sole position of weakness,” he said.

888, which runs online casino, bingo and poker websites, said it made second quarter operating income of $61m (£38.3m), unchanged on the previous year, after growth in bingo and emerging markets offset weak trading in its poker division. Poker has been hit by competition from websites continuing to take bets from US-based gamblers illegally.

888 said average daily revenues in July were down six per cent on the previous quarter.