Hill threat to Ladbrokes deal

BOOKMAKER William Hill has launched legal action to disrupt merger talks between its joint-venture partner Playtech and close rival Ladbrokes.

The company said it had secured an interim injunction against Playtech in an attempt to safeguard its legal rights.

Ladbrokes and Playtech are exploring a possible £2.2bn merger.

William Hill said that Playtech – which provides the platform for William Hill’s online gaming – had recently made contact “seeking possible significant amendments to the current William Hill Online [WHO] joint venture agreements”.

William Hill said the performance of WHO was still strong and that it remained committed to the venture with Playtech.

William Hill owns 71 per cent of the WHO venture, which was set up in October 2008. Playtech holds 29 per cent. Under the deal, William Hill has an option to buy out the software company “after four and six years on an independent fair value basis”. Playtech has said it is still interested in pursuing a joint venture agreement with Ladbrokes, even though the injunction reportedly stops Playtech sharing its software with the company at this point.

THE gaming industry is in the throes of massive change with mergers and merger speculation coming thick and fast.

Ladbrokes’ talks with Playtech come as the former is already courting 888 over a possible deal. Ladbrokes approached 888 with a £240m takeover proposal pitched at around 70p a share in December and negotiations are ongoing.

Meanwhile, shareholders in Bwin and PartyGaming voted last month to allow the merger of the two online betting giants.

That merger is reportedly worth around €2.4bn (£2bn) and will be listed on the London Stock Exchange. Bwin will retain a 51.7 per cent shareholding, while PartyGaming will hold 48.3 per cent.

The listing of Betfair last October was just another example of the fast pace of change in the industry with investors eyeing the sector as a possible treasure trove if regulations and tax rules allow it to prosper.

Last year, online gambling was worth an estimated £3.5bn overall, a figure that could rise up to five times if the US market was opened up with a relaxation of gambling laws, according to analysts.

The fact that William Hill has fired a shot across the bows of Labrokes over its pursuit of Playtech shows how high the stakes are in the rapidly changing sector.

The battle over Playtech is surely a key battle if Ladbrokes is to take up the challenge.