by Renee Israel
Two online gambling industry giants, Ladbrokes and Sportingbet, confirmed
earlier this week that talks between them regarding a possible acquisition deal
were still ongoing.
However, a deadline in the Ladbrokes Sportingbet acquisition deal
which will determine which direction the talks take, is hanging over the
negotiation table, and it is hoped that an announcement relating to this issue
will be made by next month.
Ladbrokes has less than one month to announce whether it intends to proceed
with a firm offer to purchase Sportingbet.
This is due to new laws that were introduced in the UK pertaining to Mergers
and Acquisitions. These new rules came into force on Monday, giving target
companies the option to advise potential buyers of a 28-day deadline bid. In
the past, that deadline was negotiable. The new rules also state, however, that
the target company can seek an extension from the London Stock Exchange (LSE) if
required.
As such, under the new rules, the decision by Ladbrokes to acquire Sportingbet
must be made before October 17th, whether it intends to make a firm offer or
not.
Sportingbet Confirms Acquisition Talks Ongoing
Meanwhile, Sportingbet issued a brief statement this week saying that "talks
are still continuing and a further announcement will be made in due course."
Ladbrokes is on a constant search to expand its offerings and has expressed
interest in the purchase of a number of companies in the past year. Several
months ago Ladbrokes was involved in takeover talks with 888, but pulled out
when a reasonable price could not be agreed on between the two parties.
Chief Executive Officer of Ladbrokes, Richard Glynn said that his group would
continue to seek "appropriate opportunities that may help us accelerate that
process and bring benefits to our shareholders."
Ladbrokes is thought to be eyeing Sportingbet because of the latter's
excellent track record when it comes to delivering margins that are
significantly better than their peers, as well as its well-established and
reputable internet gambling platform.
Ladbrokes is one of the UK's most established gambling companies, and runs
over 2,100 betting shops across the country. The group made a £71.8 million
profit in the first half of 2011 - a drop from £105.1 million for the same
period last year. However, Ladbrokes said that UK gamblers are "relatively
resilient" and didn't seem particularly worried about the numbers.
The industry should expect to hear more news about the Ladbrokes-Sportingbet
deal in the coming weeks.
