Ladbrokes lines up Sportingbet bid

Sportingbet has confirmed it has received a “highly preliminary approach” from Ladbrokes to potentially purchase the UK-listed operator, a board statement has revealed this morning. It added the “approach” was not a formal offer as yet. The sudden announcement follows rumours yesterday that Ladbrokes could be lining up a 70 pence a share offer for Sportingbet.

“Further to recent press speculation, the board of Sportingbet announces that it has received a highly preliminary approach from Ladbrokes plc, which may or may not lead to an offer being made to purchase the entire issued and to be issued share capital of the Company. There can be no certainty that any offer will be forthcoming or as to the terms of any such offer,” the statement read. It added a further announcement would be made “in due course”.

Rumours of a possible bid broke yesterday in the market pages of two UK national newspapers with Sportingbet’s share price rising 4.9% to 42½p.

Last November preliminary merger discussions between Unibet and Sportingbet were called off following a leak to the media.

In May this year, however, Sportingbet agreed to buy Australian operator Centrebet in a cash deal valuing the company at AUS$175m (c£115.25m). It has since raised £130m through the issue of new shares and a convertible bond with both parties said to be looking to complete the deal by August this year. eGaming Review understands Centrebet would also be part of any bid by Ladbrokes for Sportingbet.

A Ladbrokes spokesman told eGaming Review the company has an “organic strategy” and that it is “continually looking at various opportunities, including Sportingbet, in order to accelerate that strategy”.

James Hollins, analyst at Evolution, said a possible deal would make “sound strategic sense” for Ladbrokes as it would instantly establish a market-leading position in more than 10 global territories, including the key Australian, Spanish and Greek markets.

“Ladbrokes is highly UK-centric and does not have the brands to penetrate internationally. Sportingbet, via its eponymous brand and Spanish-facing ‘miapuesta’ marque, has considerable brand value and a leading trading/risk management team that would both complement Ladbrokes’ trading division and drive cost synergies,” he added.

Hollins said a price of between 80 to 90p a share would represent a suitable value for Sportingbet based on “good potential synergies” that he estimates could amount to more than £30m a year should the deal go through.

The analyst added that a number of “counterbidders”, including the likes of Unibet, BetClic, William Hill and bwin.party, could potentially attempt to buy Sportingbet themselves due to the “attractiveness of its geographic expansion, international brand opportunities and its market leading sports trading/management team.

Ever since Richard Glynn took over the helm at Ladbrokes in May last year he has been seeking ways in which to boost the company’s egaming operations. Earlier this year Ladbrokes pulled out of takeover talks with 888 to purchase the operator with no official reason given, however it was thought at the time 888’s owners were holding out for a higher price. Ladbrokes has seen its share of the UK online gaming market rapidly diminish in the last two years with arch rival William Hill pulling away thanks to its joint venture with Playtech signed in October 2008.

Yesterday Glynn removed online head Gary McIlraith – a man he employed less than a year ago as a replacement for Ed Andrewes – as part of his ongoing restructuring of the group. According to the Ladbrokes spokesman the business will move away from a “siloed approach”, separate business divisions for retail, online and telephone betting, and instead reorganise the group around three new areas of product, channels and customers. An announcement will be made next week, however eGaming Review understands current MD of UK and Ireland Retail, Richard Ames, will oversee product, retail MD Nick Rust will bear responsibility for channels, while current director of customer experience Stephen Vowles will take charge of the customer brief. It is thought McIlraith will not be replaced.