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Copyright © 2006 Reuters
HEADLINE: Playtech to buy Tribeca to join poker
top table
Body:
Gambling software maker Playtech (PTEC.L: Quote, Profile,
Research) agreed to buy rival Tribeca for $75 million (39 million
pounds) on Monday to create a company twice the size of its nearest
competitor.
The deal brings with it a number of Internet gambling websites
currently operating on Tribeca's poker software platform, including
VCPoker, PaddyPower Poker, Blue Square Poker and Scandinavian
group, Expekt.
Playtech said the deal was in line with its strategy of extending
its geographical reach, after the United States effectively banned
online gaming at last month.
Since then, Playtech and rivals like Cryptologic (CRY.TO: Quote,
Profile, Research) (CRYP.L: Quote, Profile, Research) and Boss
Media (BOSS.ST: Quote, Profile, Research), have been struggling
to find ways of improving margins to compensate for the lost revenues.
Chief Executive Avigur Zmora told Reuters: "Of the non-U.S.
businesses, I don't think we'll have close competition. Most probably
we'll be more than twice as big as the next one, with around $400,000
of rake (commission) per day."
Playtech will find "significant" synergies, and its
poker revenues will more than double in 2007, he added.
Playtech shares rose 1.6 percent to 193 pence by 9:27 a.m., valuing
the group at around 414 million pounds.
The group also announced third-quarter income from non-U.S. players
increased to 53 percent from 49 percent a year earlier.
The acquisition will cost between $75 million and $139 million,
depending on the level of revenues generated over the coming year.
"On the basis that the company will generate about $16 million
over the coming year from the migration date, the consideration
to be paid for Tribeca will be $75 million," Playtech said.
"The maximum consideration that the company will be liable
to pay is $139 million, which will be paid in the event that the
revenue generated from this acquisition exceeds $29 million over
the coming year from the migration date."
Over the next six months, Tribeca's customers will be migrated
to Playtech's software platform, then the Tribeca network will
be closed.
For the next 30 days, Playtech has the option of picking the
parts of Tribeca's infrastructure that it wants to continue operating.
"One of the companies is in the Philippines, which produces
the front end -- the look and feel (of websites)," said Zmora.
"That's a very cheap subsidiary and we need it," he
added. "Everybody wants more languages, and different feel
for different countries. Most probably we'll pick that."
"The other subsidiary is in India, with 120 programmers,
and I think we won't take that," he said.
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