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Poker News: November 13, 2006

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Copyright © 2006 Reuters

HEADLINE: Playtech to buy Tribeca to join poker top table

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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