June 23, 2011

Ladbrokes makes approach for Sportingbet

Shares in Sportingbet plc soared by more than 15 per cent in London this morning after the company confirmed that it has received a “highly preliminary approach” from UK bookmaker Ladbrokes which may lead to an offer being made to acquire the company.

Yesterday, media reports were rife with rumours that Ladbrokes were lining up a bid of 70 pence per share for Sportingbet, valuing the company at more than £460m.

For Ladbrokes, the move comes just two months after protracted discussions with online gaming operator 888 Holdings plc regarding a possible merger or acquisition were terminated.

A move for Sportingbet would improve Ladbrokes’ online offering, allowing the company to close the gap on UK rival William Hill which has seen a resurgence online following a tie-up with online gaming giant Playtech.

William Hill secured an injunction against Playtech in March to “ensure that its legal rights under the WHO joint venture agreements were maintained”, after press speculation linked Playtech to talks with Ladbrokes.

Playtech and William Hill reached an amicable resolution to their dispute last month, following which Playtech entered talks to provide solutions and services to another UK rival, Gala Coral.

Sportingbet said this morning that the company’s board has received a “highly preliminary approach” from Ladbrokes which may or may not lead to an offer being made to purchase the entire issued and to be issued share capital of the company.

“There can be no certainty that any offer will be forthcoming or as to the terms of any such offer,” the company added. “A further announcement will be made in due course.”

Ladbrokes also issued a statement this morning, confirming that the company has held preliminary conversations with Sportingbet.

"The Board has set out previously a clear organic strategy for Ladbrokes," said Richard Glynn, CEO of Ladbrokes. "We also stated that we would explore appropriate opportunities that may help us accelerate that process and bring benefits to our shareholders. These talks should be seen in that context and are highly preliminary."

Sportingbet is currently in the midst of acquiring Australian rival Centrebet International Limited for approximately AUD$180m, with the company raising gross proceeds of £130m through the issue of shares and convertible bonds to finance the acquisition.

Yesterday Sportingbet confirmed that it has received all of the required proceeds in connection with its fund raising, satisfying the conditions for the acquisition of Centrebet.

Last year Swedish online gaming operator Unibet withdrew from merger talks with Sportingbet, while bwin also made a preliminary approach to acquire Sportingbet in 2007 at a time when the UK operator's market capitalisation exceeded £261m.

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