Sector leader PartyGaming said on Thursday it was in talks to buy part of
Empire, which confirmed it was selling gaming assets to become an investment
company.
“It’ll include Empire’s Noble Poker and Club Dice casino sites,” said one
industry source, adding that the deal was expected to be completed by the
end of this week. PartyGaming is leading the race to consolidate the on-line
gaming sector, having moved into bookmaking by buying Gamebookers in August
and having held talks to buy 888. The group once towered over rivals with a
market capitalisation of nearly STG5 billion ($NZ14 billion), but when the
United States banned on-line gambling in November it lost over three
quarters of its value and began seeking ways to recover mass. Another source
said that after any deal was concluded, PartyGaming could strike a software
licensing deal with Playtech, which already powers Empire’s sites. It would
be Playtech’s first deal with PartyGaming.
PartyGaming shares gained 2.5 per cent to 30½ pence by 1245 GMT on Thursday,
while Empire’s shares rose by as much as 7 per cent, but were later down by
2.3 per cent at 43 pence. The two companies have previously been partners,
but suffered an acrimonious split last year when PartyGaming ring-fenced its
own poker players from those of four affiliates including Empire, which
relied on PartyGaming software. The split hit Empire hard, knocking 10 per
cent off its profits, and causing it to sue PartyGaming last December. That
dispute was settled in February when PartyGaming bought assets including
Empire’s damaged EmpirePoker business for $US250 million. Empire’s Internet
casino generated revenues of $US30.2 million in the first half of 2006,
while its poker site generated $US8 million, but like most of its peers it
has since quit the world’s most lucrative gaming market, the United States.
PartyGaming is planning to take on board some of Empire’s marketing experts
who have helped it stand out against bigger rivals in the past, sources
said. Empire has been seeking to distance itself from on-line gaming since
September. On Thursday, Empire said, “Following any such disposal, the
company’s intention is to become an investing company.” “The proceeds of any
disposal would be used together with the company’s existing cash of
approximately $US250 million to invest opportunisticly in both private and
public businesses and across the small, mid and large-cap range of
companies,” it added.