They may like it when their customers take a risk but 888 baulked at the offer from potential takeover candidates Ladbrokes. There was not enough cash on the table.
The two gaming monoliths started talks in January last year and figures as high as £240 million were allegedly offered by Ladbrokes to the Israeli-owned company.
Ladbrokes And 888 Takeover Falls Apart
The deal would have boosted Ladbroke's online presence and secured the future of 888. The owners of the Gibraltar-based online casino were not impressed with the offer from Ladbrokes and have decided to reject the deal.
888 CEO Gigi Levy said talks are still ongoing but there is a lot of disagreement over price. As a result of the refusal, 888's stock has plummeted this week. Now, there is a chance that, when negotiations start again,, the 888 starting point will be nowhere near as strong as it is today.
Mergers are not always a way to increase the value of a business. Earlier this year, shareholders approved the merger between PartyGaming and bwin. The two companies now represent the biggest online gaming entity in the world. However, the share price has fallen through the floor.
Ladbrokes has the enviable position of not needing to close a deal. Last year, online revenues were up 1.2% as strong growth in casino and bingo was offset by a 33% decline in income from poker. Bets through mobile phone applications grew 250%, with 18% of digital customers placing at least one bet through this channel.
In the UK, where the group has 2,100 outlets, net revenues increased 6.4% in the quarter. The group is introducing new gambling slot machines into all of its UK outlets and the roll-out is expected to complete ahead of schedule next month
Of the potential deal between Ladbrokes and 888, Ladbrokes Chief Executive Richard Glynn said: "At the end of the day I simply decided it was not in the interests of shareholders. Our drive to make Ladbrokes favourite again has good momentum."
The rejection of the deal was welcomed by the market. Shares in Ladbrokes rose by 4%. One analyst said: “We believe walking way from 888 was the right thing to do in terms of price, regulatory risk and operational fit.”
Online gaming consultant and industry insider Paul Cullen said: "Ladbrokes still desperately needs to improve its web presence to catch up with the competition. The 888 deal would have helped them get up to speed.
"However, a clear strategy and good development plan should enable a structured, disciplined, and organised company like Ladbrokes tog et their online game on match form. They probably don't need the baggage of a top heavy gaming entity," he said.
