Sportingbet Drops After Ladbrokes Talks Terminated
Sportingbet shares fell 19 percent as the company said in its own statement that it’s not talking with any other party about a possible offer. The London-based company said it’s still in talks with GVC Holdings Plc (GVC) about a potential sale of its Turkish-language website.
Ladbrokes made a “highly preliminary” approach in June after abandoning talks with 888 Holdings Plc earlier this year. The Financial Times said today Ladbrokes might not proceed with an offer even if Sportingbet sells its unit in Turkey, where online gambling is unregulated, because of concerns about potential liabilities.
“We are unable to deliver for our shareholders a structure that delivers a decent and acceptable level of regulatory exposure,” Ladbrokes Chief Executive Officer Richard Glynn said in a conference call with reporters.
In Turkey, issues “could not be resolved,” he said, adding “the ability to mitigate regulatory risk in Europe is exceedingly tough.”
Last week, Greg Johnson, an analyst with Shore Capital, questioned the acquisition, saying Sportingbet gets a high percentage of its revenue from non-regulated countries, with more than 20 percent from Turkey. Also, a possible equity funding to make the acquisition could dilute potential earnings gains, he said.
Sportingbet dropped 8.75 pence to 37 pence in London, the most since October 2006. Ladbrokes declined 0.9 pence, or 0.8 percent, to 119.7 pence, giving the Harrow, England-based company a market value of 1.1 billion pounds ($1.7 billion).
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