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Copyright 2004 Gale Group, Inc.
Business and Industry
copyright 2004 William Reed, Ltd.
Leisure Report
December 2004
HEADLINE: Sportingbet pays 163m [pounds sterling]
to get Paradise.
BODY:
Sportingbet, the UK-listed internet
betting outfit, bought Paradise Poker for 169m [pounds sterling]
($297.5m), as reported in Leisure Report in November, as part
of its hid to become a world leader in the online sports betting
and gaming entertainment industry.
Sportingbet is to pay 105m [pounds sterling]
in cash and the rest in shares for Paradise, which is one of the
four largest internet poker sites in the world. Established in
1999, Paradise is thought to command a 10% market share of the
online poker sector generating turnover of 20.3m [pounds sterling]
and an operating profit of 11.6m [pounds sterling] in the first
seven months of 2004.
Nigel Payne, chief executive of Sportingbet,
described the deal as a "significant step forward".
The deal virtually doubled the size of the company, which now
offers sports betting, casino, bingo, gaming and poker under one
virtual roof.
Analysts welcomed the move, which should give
Sportingbet steady revenue throughout the year, and also gives
the company an opportunity to sell its sports sites to its new
poker customers and
vice versa. The company's shares rose to a 12-month high following
the acquisition and are now trading at around five times their
value of a year ago.
The company also revealed results for the 16-month
period to the end of July, summarised below. Altium Securities,
the analysts, said the "acquisition de-risks the earnings
Group's earnings and should result in lower volatility.
The price paid seems very reasonable particularly when set against
the accelerating growth rate of the business. We believe that
the cross selling opportunities are substantial across the respective
client databases and [the company] can also accelerate Paradise's
expansion into the UK, Europe and beyond." Both Altium and
Arbuthnot put a 'buy' rating on the shares.
Sportingbet delayed the publication of its
first-quarter results until 25 November while it completed the
purchase, but indicated that the figures were
likely to be in line with the consensus forecast.
Sportingbet results summary
Results Altium
16 months to July reported estimate Variance
Turnover m [pounds sterling] 1,431.9 1,272.5 +12.5%
EBIT m [pounds sterling] 21.7 20.0 +8.5%
Adj PBT m [pounds sterling] 20.1 18.6 +8.1%
FD EPS 6.8p 6.0p +13.3%
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