888 takeover negotiations continue

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Ladbrokes is in takeover talks with internet betting company 888 Holdings

Internet gambling firm 888 Holdings has said takeover talks with Ladbrokes are still ongoing as it bolsters 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 71 million US dollars (£44 million) in the final quarter of 2010.

Bookmaker Ladbrokes revealed it was in talks to buy 888 in December, following reports it had offered £240 million for the company.

A Mail on Sunday report 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 £153.7 million.

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.”

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