Party Gaming and Austria-based gambling group Bwin are allegedly involved in merger discussions, according to stories published in The Times and Sunday Times over the weekend. The move would potentially create a £2 billion online poker, casino, and sports betting company.
Shares of Party Gaming and Bwin jumped 2.5% and 4.1%, respectively, on Monday morning after the reports broke. Both companies have similar market value; Party Gaming is worth £1.1 billion, while Bwin is valued at about €1.3 billion.
Party Gaming and Bwin have refused to confirm the story, according eGaming Review. Bwin, Europe’s biggest sports betting provider, said it wanted to take part in sector consolidation, but added that it is in talks with everyone in the industry on an ongoing basis and was not in advanced talks with Party Gaming. The Austrian group also told Reuters that it is not in advanced merger talks with anyone.
Party Gaming, meanwhile, has been looking for a major sports betting platform for years despite acquiring Gamebookers in 2006 for £102 million. The company has openly stated its determination to hunt for a bigger target in order to become a leading sports book operator and complement its online poker, casino and bingo platforms.
James Hollins at brokerage Daniel Stewart said a Bwin-Party Gaming merger would be “exceptionally strategically compelling,” adding, “the combined groups’ poker operations would drive clear scale economies and liquidity to compete squarely against the U.S.-facing giants of PokerStars and Full Tilt.”
Analyst Nick Batram at KBC Hunt is confident that a large deal is in the near future: “There was lots of press comment over the weekend suggesting that Bwin and Party Gaming have held informal merger talks. This doesn’t come as a surprise, as online groups frequently talk informally. However, we believe that the recent sector consolidation will gain momentum through 2010 and it is only a matter of time before we see further sizable deals.”
Party Gaming has been busy in deal making talks as several countries are in the process of regulating online gambling, most importantly the United States. In November, Party Gaming purchased the World Poker Tour (WPT), with many believing the company was attempting to set itself up for a return to the U.S market. Party Gaming’s Chief Marketing Officer, Chris Welch, later verified that idea: “This is the first step toward us returning to the United States.”
WPT announcer and PartyPoker spokesperson Mike Sexton agreed, saying, “We all think [the Unlawful Internet Gambling Enforcement Act is going to be reversed] at some point. It’s just a matter of when. I’m convinced we’re going to see another poker explosion like we saw six years ago. It’ll be second to none.”
Party Gaming was reportedly involved in buyout talks with GigaMedia Limited earlier this year, but nothing developed. GigaMedia is the company behind the online poker site Everest Poker. Party Gaming purchased Cashcade, owner of the Foxy Bingo website, in July to enhance its own online bingo site, PartyBingo.
