London (Reuters) – UK bookmaker Ladbrokes Plc said on Sunday it was considering a possible bid for online gaming group 888 Holdings Plc, as the sector consolidates after a U.S. ban on Internet-based gambling.
„We’re in the early stages of reviewing a possible transaction involving 888,“ said a Ladbrokes spokesman. „No decision has been made about whether a proposal will be made.“
An industry source said: „Any deal (to buy 888), if it occurred, would have to be north of 470 million pounds.“
888’s outgoing Chief Executive John Anderson is a former Ladbrokes executive director and has close contacts with firm.
Industry sources said Ladbrokes Chief Executive Chris Bell was currently in Israel to discuss the offer with 888’s founders and majority shareholders Avi and Aharon Shaked.
Online gaming groups have been rushing to consolidate and to find cost synergies to improve margins since the United States effectively banned Internet gambling last month.
British media reports had said 888 was in merger talks with PartyGaming Plc, but a source close to the situation told Reuters on Saturday that PartyGaming was losing interest in a potential deal.
888 declined to comment on Ladbrokes statement, but reiterated its statement last Monday that it was in talks about a potential tie-up with a number of third parties.
888 listed in September 2005 with an offer price of 175 pence a share and market capitalisation of around 590 million pounds.
Its shares hit a 52-week high of 263 pence in April, but have slumped since July when the United States started a crackdown on online gambling.
Last month, U.S. President George W. Bush signed into law legislation that effectively banned companies from accepting wagers over the Internet and also stopped credit card companies from processing the payments.
Meanwhile, PartyGaming is in talks to buy part of Austrian Internet betting company bwin.com, a source close to the situation told Reuters on Saturday.
PartyGaming said last month that its sports betting operation Gamebookers had exceeded expectations since it was bought in August, and the source said buying part of bwin.com would be a logical next step.
PartyGaming is also looking at other deals, including smaller online bingo and casino operators, the source added.