Ladbrokes at highest level in five years after expanding online deal

Ladbrokes Plc rose to its highest in five years after the UK gambling operator said it expanded a partnership for online and mobile software with Playtech Ltd, which ended a joint venture with William Hill Plc this month.

Ladbrokes rose 6.5% to close at 239.8p, its highest price in London since Jul 2008. Playtech advanced 3.4%, erasing most of the decline since it said on Mar 1 that William Hill exercised an option to take full control of gambling venture William Hill Online.

“Following the success of William Hill Online and given the problems that Ladbrokes has encountered in its own online business, this will be seen as a transaction which could significantly improve the Ladbrokes online prospects,” Jeffrey Harwood, an analyst at Oriel said.

Ladbrokes and rivals, including William Hill, are increasing their online offerings as more customers use the internet and mobile phones to place bets. Playtech will provide expertise as Ladbrokes creates a new e-commerce and digital marketing services operation, Ladbrokes said. It will also provide more software. “The deal augments perfectly the organic development in Ladbrokes,” chief executive Richard Glynn said. “We had to build the foundations. This deal will accelerate the pace of growth.”

Payments to Playtech for marketing services will be based on a “success fee only basis” and will be made incrementally based on increases in earnings before interest, taxes, depreciation and amortisation at the digital unit, Ladbrokes said. The agreement runs through 2017.

William Hill is acquiring Playtech’s 29% stake in William Hill Online for £424m in order to take full control of its digital unit.

Playtech chief executive Mor Weizer has said he was delighted with the valuation.