Ladbrokes Acquisition of Online Gambling Firm Sportingbet Terminated

Published Monday, October 10, 2011 -

The immediate reaction to the announcement that gambling giant Ladbrokes has broken off discussions surrounding the purchase of Sportingbet was the value of Sportingbet stock dropped significantly on the London Exchange.

Talks have been “mutually terminated” Ladbrokes officials said causing the largest reduction in Sportingbet’s stock in five years. Its shares fell 19 percent after the firm announced it would not be seeking other offers at this juncture. It did say however it’s still holding discussions with GVC Holdings about a possible sale of its Turkish-language website.
It was suggested that the possible deal was scuttled because of Ladbrokes concern over legal liabilities if it acquired the Turkish segment of Sportingbet because online gambling is unregulated and illegal in Turkey. Ladbrokes was in talks with 888 Holdings prior to commencing talks with Sportingbet.

Richard Glynn, Ladbrokes Chief Executive Officer talking with reports said, “We are unable to deliver for our shareholders a structure that delivers a decent and acceptable level of regulatory exposure,” Glynn continued, In Turkey, issues “could not be resolved,” adding,  “the ability to mitigate regulatory risk in Europe is exceedingly tough.”
From the outset analysts were predicting that there would be problems associated with the acquisition of Sportingbet. The contested issues were Sportingbet’s high percentage of revenue from unregulated countries, with more than 20 percent coming from Turkey.  There was also the possibility of equity funding to complete the sale which would dilute potential earnings gained by Ladbrokes.
When viewing the stock graph over the last five years it’s a wonder the Ladbrokes even considered buying the online gambling firm Sportingbet. A drop of 19.2 percent is a major blow to the firm even so some analysts are predicting a rebound over the next little while, not withstanding more bad news for the company.  It’s current value at 37 p is afar cry from the 52 week high of 72.35 p.



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