Ladbrokes has confirmed it is in talks to acquire rival 888 in a deal which would value the operator at around £240m.
The Sunday Telegraph reported yesterday that Ladbrokes had made an offer of 70p a share for the casino specialist and Dragonfish owner. 888 shares closed at 49p on Friday. Both companies this morning released a statement to the London Stock Exchange confirming they are in preliminary talks, but that “there can be no certainty that these discussions will ultimately lead to an offer.”
The deal currently on the table is for significantly less than when Ladbrokes first attempted to purchase 888 four years ago, in a deal which valued 888 at around £470m. The 2006 deal fell through due to uncertainty over the future of the US market caused by the passage of the Unlawful Internet Gambling Enforcement Act (UIGEA).
Newly installed Ladbrokes chief executive Richard Glynn recently launched “Project Galvanise” aimed at lifting the company’s performance and doubling the company’s share price within five years.
Ladbrokes head of PR Ciaran O’Brien was however keen to stress that the proposed acquisition was in its “early days,” and that “nothing was certain” at this early stage. He also stated that it was not part of Glynn’s ‘Project Galvanise’. 888 was not prepared to provide further comment to eGR on the deal at this stage in negotiations.
888 has been the subject of constant takeover speculation since it posted a profit warning in May this year, leading to a 13% drop in its share price, and its Q3 results remained stagnant. However, Q4 results were described as “buoyant”, keeping its profits in line with end-of-year expectations.