Shares of online gaming firm 888 Holdings PLC soared Tuesday after the company confirmed that it has been approached by fellow gambling company, William Hill PLC, with a possible purchase offer. 888’s stock price closed at 171.50p after opening at 143p, a jump of 20 percent.
888 issued the following press release in response to media rumors:
The Board of the Company notes the recent press speculation concerning the possibility of an offer being made for the Company.
The Board of the Company confirms that it received an approach regarding a possible offer for the Company by William Hill PLC. There can be no certainty, however, that any firm offer will be made nor as to the terms on which any firm offer might be forthcoming.
The Company’s shareholders will be kept informed of relevant developments and a further announcement will be made as appropriate, but in any event by no later than 28 days from the date of this announcement.
According to the Financial Times, “people close to the talks” have said that William Hill’s offer is for more than 200p per share, significantly higher than even Tuesday’s impressive close. With 354.34 million shares outstanding, a 200p per share price would give 888 a market capitalization of £708.68 million. As it stands now with the 171.5p per share price, the company has a £607.69 market cap, so a 200p per share offer would amount to a £100 million total purchase premium.
A combination of the two companies, on the surface, makes a lot of sense. 888 is a strong player in the poker and casino gambling space, and though William Hill has those offerings as well, it is best known as one of the top sports books in the world. The combined company would have all online gaming bases covered.
The Financial Times sees one of the biggest stumbling blocks to the deal being 888’s ownership. The company’s Israeli founding families, Ben-Yitzhak and Shaked, own about 60 percent of 888’s stock. More specifically, Avi Shaked and his late brother’s children hold 48.6 percent of it, while the Ben-Yitzhak family has 10.5 percent. Those are the people who will have to be convinced to make the deal.
As mentioned, 888 is a power in the online poker space. Though nobody is going to take the number one spot from PokerStars any time soon, 888poker is the second largest poker site on the internet, according to PokerScout.com, with a seven day average of 2,700 cash game players. It is also starting to dominate the small United States regulated market. In Nevada, the one significant poker room, WSOP.com, uses 888’s software. 888 is also preparing to launch the All American Poker Network (AAPN) in Nevada, which will be composed of WSOP.com, a new 888-operated poker room, and an offering from the Treasure Island casino which will also use 888’s software. All three Delaware poker rooms use 888’s technology and plan to become part of AAPN through an interstate compact between Delaware and Nevada. In New Jersey, WSOP.com and 888 have combined some of their player pools, making them the largest network in the Garden State.
