'Wave of mergers' may be on the cards for gambling companies

Published on Tuesday 9 February 2010 20:23

ONLINE gambling group 888 predicted that 2010 could be a year of widespread consolidation for the industry, confirming it was on the hunt for acquisitions.

In recent weeks Partygaming, another FTSE-250 online gambling company, admitted that it was in talks with rival Bwin, an Austrian online bookmaker.

888 chief executive Gigi Levy said a major deal between two large gambling companies could easily lead to a wave of mergers.

"Once somebody goes ahead, it will happen very quickly."

Levy said Gibraltar-based 888 is in "advanced" talks about making a small acquisition, while it had also had "very early" talks about another larger deal.

A combination of Partygaming and Bwin would create a company worth around $4 billion (2.55bn). Rivals are also looking to put themselves in a position where they will have the firepower to move quickly if restrictions on online gambling in the United States are related.

Levy admitted his company was actively seeking to do deals, because of the possible synergies from combining operations.

"The synergies between any two big operators would be around $40-50 million," he said.

888 said it had $60m of free cash on its balance sheet, "leaving the group in a sound position to exploit further M&A opportunities when they become available".

Yesterday 888, a member of the FTSE-250, revealed that its operating profits in the last three months of 2009 rose 14 per cent to $68m, as it attracted new customers.

The same customers also gambled more, with operating income per customer rising by 5 per cent over the third quarter.

Shares in the company closed up 0.7p at 103.5p.