Ladbrokes and 888 Holdings, two online gambling giants who run, among other things, popular online poker sites, have announced that talks about a possible acquisition deal have fallen through. The announcement was made on Friday after months of negotiations that eventually led to a dead end. Interestingly, the companies were involved in similar talks almost four years ago to the day, with the same results.
“It is very amicable between us but at the end of the day I simply decided it wasn’t in the shareholders’ interest,” said the Chief Executive of Ladbrokes, Richard Glynn.
Sources close to the groups said that Ladbrokes was prepared to pay 70 p a share for 888 Holdings, however the latter was demanding a higher price. 888 shareholders were after something closer to 80 p a share.
Glynn wasn’t very optimistic about the talks being renewed in the near future but left the door slightly ajar by stating: “You can never say never with anything.”
Looking to the future, 888 Holdings, which reported poor financial results for 2010 recently, will now have to search for another partner in order to compete with huge mergers now taking place, such as the latest Party Gaming/bwin partnership.
As a result of the announcement that the talks had failed, 888 Holdings shares plummeted to their lowest levels in almost four months, while Ladbrokes shares gained 7%.
An analyst with Investec Securities, Paul Leyland commented: “We believe walking away from 888 was the right thing to do in terms of price, regulatory risk and operational fit. Ladbrokes’ lackluster online performance demonstrates the scale of the job.”
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