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PartyGaming’s announcement that they will be merging with Austrian online gambling powerhouse has the industry abuzz with excitement. The new company, which is hungry to enter the U.S. market, will be worth a whopping $3.7 billion.
The UK online poker company hailed it a "transformational opportunity".
Perhaps it was only a coincidence that the deal was made public exactly one day after passage of the Internet Gambling Regulation, Consumer Protection and Enforcement Act - the first step towards the repeal of the U.S. federal ban on Internet gambling imposed in 2006. That ban forced PartyGaming out of the U.S. market at a time when nearly 70 percent of their customers resided in the States. Party went from being the number one online poker room in the world to the 4th largest. In 2004, PartyGaming was the largest single IPO on the London Stock Exchange and three of its founders were listed on the Forbes Billionaire’s List in 2006 alongside that issue’s cover boy and founder of Bodog.com, Calvin Ayre.
Both companies have been in discussions about a potential merger for nearly 6 months now. Many experts suggest this is only the beginning. The new company is likely to begin buying up smaller online gambling businesses along with a technology company to bring its IT platform in-house, the Australian suggests.
Like the airline industry, expect to see other competitors follow suit and double, even triple, their size. Gibraltar-based 888 Holdings has traditionally tried to duplicate what Party has done, including enter into negotiations with U.S. law enforcement.
The market value of PartyGaming prior to last night’s announcement was ₤1.05bn ($1.8bn), while Bwin's value was €1.3 billion ($1.9bn). Investors in Bwin will receive 12.23 new Party-Gaming shares for every share they own.
Jim Ryan, chief executive of PartyGaming, and Norbert Teufelberger, head of Bwin, will become co-chief executives in the merged group, which last year reported combined net gaming revenues of €682 million.
PartyGaming’s shares shot up 52p, or 20.4 per cent, to 309p following news of the proposed merger.
Aaron Goldstein, Gambling911.com
