The online gaming world has been abuzz for the last few days over rumors that rivals Unibet and Sportingbet were in merger talks. However, both companies announced on Tuesday that negotiations have come to an end.
Word of the potential business deal cropped up on Sunday with a report in London’s Sunday Times. There were virtually no details reported, as neither company offered comment, but it was believed that there were still “lots of hoops to go through” and no formal announcement would be heard for several months.
On Monday, Sportingbet officials decided to break their silence, providing this intentionally vague statement: “The Company confirms that it has had and will continue to have discussions with different parties in relation to a variety of potential opportunities. There can be no certainty as to whether or not such discussions will result in any form of transaction. Any further announcement will be made if and when appropriate.”
Apparently, the “appropriate” time for a further announcement was the following day, as Sportingbet confirmed that it had been in discussions with Unibet and that those talks had concluded. “The Board of Sportingbet Plc notes continuing press speculation following an article which specifically referred to merger discussions with Unibet Group Plc, a company listed on the OMX Nordic Exchange Stockholm. Unibet informed the Company today that it has withdrawn from those talks.”
Shortly thereafter, Unibet released a similar statement, indicating, “Preliminary discussions with Sportingbet are no longer ongoing.”
A merger of the two companies would have been significant, as both are major players in the global sports betting market, although neither accepts customers from the United States. For the 2009 fiscal year, Sportingbet’s net gaming revenue totaled £207.5 million ($330.15 million), while Unibet’s gross winnings were £138.3 million ($220 million).
Sportingbet owns Paradise Poker, which used to be one of the top online poker rooms in the industry. It is now part of the International Poker Network, which ranks as the 11th largest network/room on the Net in terms of cash game traffic according to PokerScout.com. Unibet’s poker room is on the Microgaming Network, which ranks ninth.
Unibet’s stock price jumped on the initial news of the potential merger, rising SEK 7.00 to SEK 130.50, a 5.7% increase. At the time of writing, the news of the failed talks has only dropped the Swedish firm’s share price by SEK 2.00. Sportingbet’s stock price also rose on the initial news, increasing 2.98 pence, or 5.1%. The share price has since dropped about 1.5 pence, although the London Stock Exchange is still open.
In the meantime, it isn’t all bad news when it comes to business deals for Sportingbet. On Monday, the company announced a new joint venture with Russia’s second largest bookmaker, First International Bookmakers Company (FIBC). The deal will span five years, with the two companies offering a Russian online sports betting product called “Liga Stavok powered by Sportingbet.” Liga Stavok is the well-known brand under which FIBC already operates. There are 256 Liga Stavok licensed brick-and-mortar locations throughout Russia, covering 67 cities. Liga Stavok competes with 17 other licensed bookmakers in Russia, although it has a significant competitive advantage, as it is the exclusive betting partner of the Russian Football Premier League.
Said Sportingbet Chief Executive Andrew McIver of the joint venture, “I am confident that the combination of Sportingbet’s world class online sports betting product and expertise with Liga Stavok’s strong brand and exclusive betting partnerships will enable the joint venture to build a leading position in this exciting, fast-growing market. This partnership is a perfect fit with Sportingbet’s strategy to build geographical diversity through new markets, working with the highest quality partners where appropriate.”