888 takeover hopes remain as sales surge

Internet gambling firm 888 Holdings today said takeover talks with Ladbrokes were still ongoing as it bolstered its negotiating position with strong final-quarter sales.

The company, which offers casino, poker and sport betting, said an announcement regarding a potential deal with Ladbrokes would be made when appropriate - following reports that discussions had hit difficulties over the tabled price.

888, which recently launched an advertising campaign with former Australian international cricketer Shane Warne, posted an 18% increase in operating income to US$71m (€52.4m) in the final quarter of 2010.

Bookmaker Ladbrokes revealed it was in talks to buy 888 in December, following reports it had offered £240m (€285.5m) for the company.

A Mail on Sunday report yesterday claimed the potential deal hit a stumbling block after 888 rejected the bid and Ladbrokes was unwilling to move any higher.

But after 888 revealed the talks were still ongoing shares edged ahead nearly 2% to 44.5p, valuing the company at £153.7m (€182.85m).

The company’s share price has lost 58% of its value in the last year, as demand for online poker decreased and hit revenues and profits.

Chief executive Gigi Levy said: “We are very pleased with the results delivered during the last quarter of 2010 – especially the record 18% quarterly sequential growth.

“Our marketing activities have driven record numbers of players to our sites, and growth was achieved across our business lines.”

The group said its strong fourth-quarter trading continued into 2011 with average daily revenues increasing by 3% in January. Casino revenues were up 17%, while bingo and poker were up 13% and 28% respectively.

Ivor Jones, analyst at brokers Numis Securities, said: “888’s long-suffering shareholders must have been hoping that Ladbrokes would gallop quickly to the rescue.

“However, a good final quarter to 2010 is positive news for shareholders and gives 888 a better negotiating position.”

He added: “We believe there is a good fit between the two businesses and that both sets of shareholders should be supportive of a deal.”