In nearly identical statements on Friday morning, it was revealed that merger talks between the British bookmaking operation Ladbrokes and the online gaming conglomerate 888 Holdings have been terminated.
The two companies released similarly worded statements through the London Stock Exchange on Friday. Ladbrokes’ statement read, “In response to press speculation, Ladbrokes announced on 20 December 2010 that it was in very preliminary discussions with 888 Holdings PLC regarding a possible offer for 888. Ladbrokes today announces that these discussions have been terminated.”
In a simultaneous release to the London Stock Exchange, 888 Holdings’ statement read, “Further to the announcement made by 888 on 20 December 2010 concerning discussions with Ladbrokes PLC regarding a possible transaction, the Board of 888 announces that the parties have agreed to discontinue talks.”
The discussions, which had been ongoing since last December, would have seen two strong online and live bookmaking and poker operations joining forces in a highly competitive industry. While not confirmed, the price of the merger was rumored to be in the neighborhood of £240 million (approximately $391 million). The glacial pace of the negotiations was also rumored to be one of the reasons for the departure of former 888 Chief Executive Officer Gigi Levy, who resigned last weekend.
Although merger discussions have fallen through, 888 and Ladbrokes continue to show their strength through the first quarter of Fiscal Year 2011. The companies released their respective quarterly reports prior to the start of trading on the London Stock Exchange on Friday.
888 released its First Quarter 2011 Key Performance Indicator report on Thursday, showing increases across the board. The group’s revenue was $75 million, up 9% over the $69 million from the same time period in 2010 and up 6% over the fourth quarter of 2010. 888 Holdings reports that every area of the company was responsible for these increases, including its casino and poker operations.
888 reports that the company has 9.2 million casino, poker, and sports betting real money customer accounts as of the end of March, an increase of 21% versus the same time in 2010. Casino revenues have increased 2% for Q1 2011 over Q1 2010, with revenues of $33 million. Poker revenues, which decreased in Q1 2011 versus the same time period in 2010 ($11 million versus $12 million), show an increase when compared to Q4 2010.
Richard Kilsby, the Chairman of 888 Holdings, took time during the announcement of the Q1 2011 numbers to thank Levy for his service to the company. “These record results are a fitting end to Gigi’s tenure as CEO at 888 and provide an excellent base from which to grow the business in 2011. The Board would like to thank Gigi for his contribution during his time as CEO and look forward to his continuing involvement as a member of the Board.”
In its report, Ladbrokes also showed that revenues and profits were on the rise. The group’s net revenue for the first quarter of 2011 was up 2.3%, with especially high performance in a six-week period from mid-February to the end of March (4.2%). Operating profits were up 1.9%, but this was affected by a one-time VAT payment for 2010; excluding the VAT payment, operating profits were up 20%.
Ladbrokes chief executive Richard Glynn was optimistic about the continued strong performance of the company for the rest of 2011: “We expect the economic climate in the U.K. to remain challenging in 2011, with consumer confidence and disposable incomes continuing to suffer. Notwithstanding this, at this early stage in the year, the business is performing in line with the Board’s expectations.”
