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888.com Says It Is Nearing a Purchase

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Published on:
Aug/04/2009
888.com

An online gambling company, 888, said Monday that it was close to making an acquisition after strong trading from its casino, bingo and sports betting Web sites led to an improved overall performance in the second quarter, Reuters said.

The chief executive, Gigi Levy, told Reuters that 888 is in talks with a number of potential targets and expects a deal to be completed soon.

"One of them is very close to closing. It's a bolt-on but would help us in our business-to-business strategy. A few others are at an earlier stage," Mr. Levy said in a telephone interview.

To fund acquisitions, Mr. Levy said he is confident the company could raise an amount of at least one times Ebitda (earnings before interest, taxes, depreciation and amortization). The consensus forecast for full-year Ebitda at 888 currently stands at $52.5 million (£31.1 million), according to a Reuters Estimates poll of six analysts.

The company also holds cash of $110 million and has no debt.

In common with other online gambling companies, 888 is focusing on the business-to-business segment to drive growth as tough economic conditions put pressure on consumer business.

The company's business-to-business division takes 888's existing software and infrastructure and provides those services to third parties.

Second-quarter operating income at 888 was $61 million, up 7 percent from the previous quarter. Casino income was $29 million, up 10 percent from the first quarter.

The emerging offering, which includes bingo and sports betting, had income of $7 million, up 40 percent.

The financial performance at 888 contrasted with PartyGaming, which said in July its second-quarter trading had been in line with the first quarter.

Shares in 888 were trading at 85 pence, up 3.4 percent at 10:50 a.m. PartyGaming were down 0.2 percent to 255.5 pence.

An Evolution Securities analyst, Ivor Jones, described the second-quarter growth as "particularly encouraging" and reiterated his buy rating and price target of 192 pence.

"The potential for M.&A. underpins our enthusiasm," he said.

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Source:  New York Times

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