Sportingbet surges on Ladbrokes talks
Friday 24 June 2011
Ladbrokes declared an interest in its smaller rival Sportingbet yesterday, with a bid approach that marks the bookmaker's return to the acquisition trail after talks with the online gaming specialist 888 Holdings faltered earlier this year.
Sportingbet, which was seen as a possible takeover candidate after Sweden's Unibet pulled out of merger talks last year, saw its shares spike by nearly 16 per cent after revealing that it had received the "highly preliminary approach" from Ladbrokes. The FTSE 250-listed group confirmed the move later in the day. Neither party mentioned a possible price, though recent market rumours have pointed to a bid of about 70p per share, which would equate to £460m. Last night, Sportingbet shares closed at 49.25p, up 6.75p.
Ladbrokes' chief executive, Richard Glynn, said the move was in line with the group's strategy. "The board has set out previously a clear organic strategy for Ladbrokes. We also stated that we would explore opportunities that may help us accelerate that process and bring benefits to our shareholders," he explained. "These talks should be seen in that context."
Analysts said the move made sense, as Sportingbet, which recently bolstered its position in the Australian market by agreeing to buy Centrebet, would bring international exposure to the UK-focused Ladbrokes.
"It would instantaneously establish a market-leading position in more than 10 global territories, including the key Australian, Spanish and Greek markets," Evolution Securities analyst James Hollins said. "Ladbrokes is highly UK-centric and does not have the brands to penetrate internationally."
But Mr Hollins added that the possibility of an agreement was somewhat clouded by the regulatory uncertainty in a number of markets around the world. Moreover, there could be counter-bids from rivals such as William Hill, Unibet and Bwin.Party, he said, also highlighting the possibility of interest from privately owned players such as BetClic.
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