Sportingbet Acquires Paradise Poker
By Pete Harrison
LONDON (Reuters) - Sportingbet has agreed to buy Internet poker site Paradise Poker for an initial payment of $297.5 million (162.5 million pounds), securing its position as the world's biggest online betting firm. "This more than doubles us in size," Chief Executive Nigel Payne told Reuters on Thursday. "If we believed we were No. 1 before, then we certainly are today."
Its shares soared 9.9 percent by 9:15 a.m. to 127-1/2 pence, valuing the group at around 265 million pounds.
Sportingbet, which averages 8 bets a second, said sports bets were up 36 percent in the year to July 31, and its customers were up 30 percent to 1.2 million.
"Over the last 16 months, we have seen the number of customers, the number of bets taken, and the profits and cash generated reach record levels," said Payne.
Sportingbet also announced pretax profit of 5.4 million pounds for the 16 months to July 31, compared to 1.4 million in the 12 months to March 31, 2003. British firms are set for a boost from the relaxation of the UK 's gambling laws, and are stealing a march on competitors in the United States , where online betting is strictly regulated.
Payne estimated there were over 50 million poker players in the United States -- where Paradise does 79 percent of its business -- but only 2 percent of U.S. players had converted to using the Internet.
"There's a great deal of growth yet to go," he said.
Paradise , which was launched in 1999 and is now the world's No. 3 poker site, has 97,000 active players.
"We are big fans of the online poker space," Altium Securities said in a research note. "This meaningful acquisition de-risks the group's earnings and should result in lower volatility. The price paid seems very reasonable."
It said it would pay the unnamed vendors $193.3 million in cash and 56.7 million shares.
The $193.3 million will be funded by taking out 90 million pounds of bank debt and by placing 44 million shares at 110 pence each. A further $50 million could be paid in cash and shares for Paradise if it meets profitability targets over the next three years.
