Ladbrokes Rises, 888 Plummets After Takeover Talks End
888 fell 16 percent, and Ladbrokes gained 7 percent after saying today in a statement that discussions with the Gibraltar- based Internet gambling company have ended.
Ladbrokes wants to expand its Internet betting operations, where first-quarter net revenue grew only 1.2 percent, it said today. Yesterday former 888 Chief Executive Officer Gigi Levy, who is still a director, said a Ladbrokes bid was “still a possibility,” though price was an issue.
“We believe walking way from 888 was the right thing to do in terms of price, regulatory risk and operational fit,” wrote Paul Leyland, an analyst with Investec Securities. “Ladbrokes’s lackluster online performance demonstrates the scale of the job.” He has a “hold” recommendation on Ladbrokes.
“The board and I simply decided it wasn’t in the shareholders’ interests,” Chief Executive Officer Richard Glynn said during a conference call. He wouldn’t comment on whether price was an issue, saying only that relations with 888 remain “very close, very amicable.”
Ladbrokes’ first-quarter operating profit, excluding so- called high rollers, increased 1.9 percent to 49.2 million pounds ($80.4 million), the Harrow, England-based company said today in a statement.
Ladbrokes said it’s “performing in line” with board forecasts. Excluding a value-added tax refund last year, profit gained 20 percent, the company said.
On the Internet, casino and bingo unit gains were offset by lower sales in sports betting and poker, the company said.
888 fell 6.75 pence to 34.75 pence in London, the lowest level since its Sept. 2005 public offering, giving it a market value of 120 million pounds. Ladbrokes rose 9.4 pence to 144.3 pence. Its shares have gained 18 percent so far this year, giving it a market value of 1.3 billion pounds.
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