PartyGaming, best known for its online poker room PartyPoker.com, is reportedly involved in takeover talks with GigaMedia Limited, the company behind online poker site EverestPoker.com.
GigaMedia currently has a market value of $363 million (£246m) and is rumored to have hired the investment banking firm of Goldman Sachs to find a buyer for the company. PartyGaming meanwhile has been looking for expansion, and despite their reluctance to speak directly about a possible takeover of GigaMedia, many believe it is at the top of their target list.
“We have made it very clear we believe the industry will consolidate and we will look at opportunities as and when they arise”, said a spokesman for PartyGaming.
Gibraltar-based PartyGaming settled a legal dispute with United States authorities in April for providing online gambling services to Americans prior to the implementation of the Unlawful Internet Gambling Enforcement Act of 2006. The company agreed to a $105 million settlement with the US Department of Justice but will not be prosecuted for the violations.
With that now in the past, PartyGaming is looking to move forward in a big way. The first step is meeting with financial institutions in hopes of securing funding for future acquisitions, such as GigaMedia. A consolidation between the two corporations would create a giant in the online poker world, as Party Poker is currently the fourth biggest network around, with Everest coming in at sixth. A merger could potentially generate numbers almost as high as Full Tilt Poker, which ranks second. A union between the two could also pave the way for a return to the United States should the UIGEA be repealed.
GigaMedia told investors in March it was “in discussions with several interested parties concerning the possibility of a strategic merger or a sale.” The company, which made a profit of around $12 million last year, was incorporated in September 1999 as a company limited by shares organized under the laws of the Republic of Singapore, and completed an initial public offering of its shares on NASDAQ on February 24, 2000. Some shareholders may oppose holding stock in a London-based company, which could wipe out any likelihood of a merger with PartyGaming.
GigaMedia’s Everest Poker signed a multi-year deal in 2008 to become the exclusive on-table poker sponsor at the World Series of Poker. Party Poker had been the official sponsor through 2007.