News

Wednesday, 30 March 2011 01:05

In what could be an industry changing move, leading UK bookmaker Ladbrokes are reportedly in serious merger talks with online gaming software leaders Playtech.

If these talks bear fruit and the two companies do indeed join forces, they will create a huge gambling group that would be worth an estimated £2.2 billion. This will put the newly created super company into the same league as the recently merged giants, Bwin and Party Gaming, producing a serious contender for the biggest slice of the online and offline gambling pie.

Reports have revealed that Ladbrokes has already contacted both the UBS and Greenhill investment banks and asked them to look over the viability of merging with Playtech. Heading up the discussions is the possibility of the merger being share-based, which will benefit shareholders in both companies. Playtech is currently under the control of Teddy Sagi the Israeli businessman who holds a 40% controlling share in the software company.

While Playtech is the worlds leading provider of gaming software to the online gambling industry, including online casino software as well as that for many hundreds of casino games, Ladbrokes is better known for its involvement in land based bookmakers, or betting shops in the UK, of which it owns 2,700 nationwide.

Following the company's decision to move its headquarters to Gibraltar to take advantage of its lower taxes and more relaxed rules, it has been looking to expand its business further into the online arena and bringing Playtech on board is seen by industry experts as an excellent way of doing just that.

The only potential fly in the ointment is the current deal Playtech has with Ladbroke's UK betting rivals William Hill. The partnership has created an online platform called William Hill One which has enabled the UK bookmaker to have an online gambling presence with Playtech providing the software. But this obstacle could viewed as little more than a minor irritation with the potential financial rewards to Ladbrokes of a merger, as well as the many benefits such a coming together would provide for shareholders and customers alike.

Playtech has reported a rise in profits to €173 million for 2010, which is up 26 percent on the previous year. This makes them all the more valuable to the UK bookmaker, who is also looking at the possibility of a takeover of 888 Holdings, another UK based online gambling company, for an estimated £240 million.