Sportingbet has confirmed it is considering options for the disposal of its unregulated Turkish business, which would clear the way for a £600m takeover by Ladbrokes.
With the two parties known to be locked in discussions regarding a valuation for the online sports betting specialist, the sale or licensing of Sportingbet’s Turkish business is seen by analysts as removing the penultimate obstacle to Ladbrokes lodging a bid of between 80p to 90p a share.
Noting “press speculation” in this morning’s London Times over the potential disposal of its Turkish business, which according to chief executive Andy McIver (pictured) currently accounts for circa 15% of the operator’s NGR, Sportingbet released a statement to the London Stock Exchange: “The company confirms that, as part of its long-term strategy of increasing the proportion of its business mix derived from regulated markets, it is currently undertaking a review to evaluate its strategic options in relation to its Turkish language website business. This review may lead to an exit from this business.”
Sportingbet first entered Turkey in 1998 via a marketing deal with then owner of Superbahis.com, Maslin Properties. The Turkish authorities however enacted laws in 2007 that effectively outlawed online sports betting outside of the state-owned IDDAA, the same year Sportingbet brought out Maslin’s online business for an initial consideration of £3.5m. Two Sportingbet employees were arrested the following year as part of a clampdown by Turkish authorities, although no prosecutions resulted from the detentions.
Analyst James Hollins of Evoluition Securities said this morning’s news indicated that Sportingbet was “taking a direct and sensible approach to 'dealing with' its Turkey issue”, which offered “strong, secure returns, but [was] ultimately unloved by the market”.
Reiterating his buy recommendation on Sportingbet, Hollins added: “The potential sale could, we think, realise a 'surprisingly' strong cash injection into the group (surprising, as in the markets value Turkey at next to nothing), possibly into three figures (£100m). This would (1) resolve the Turkish issue, (2) improve net cash, (3) increase the likelihood of a Ladbrokes offer and (4) drive an improved share price, in our opinion.”
Sportingbet recently agreed terms for its acquisition of Australian online business Centrebet, the completion of which would increase the share of its business from regulated markets to around 33%. Regulation in its core markets of Spain and Greece would lift this regulated component to as high as 60%, but Greek draft law is currently held up by a disagreement by the ruling party over its form and the EC citing concerns regarding its compatibility with EU law.
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