Online casino and poker company, 888 Holdings, closed at record highs the previous day on the expectation that the company would be the target of a takeover bid by Ladbrokes. The anticipated takeover would most likely take place once the bookmaker completes the £3.3bn sale of its Hilton Hotels. Ladbrokes’ chief executive, Chris Bell, intends to use the company’s newly acquired independent status to expand overseas and online, leading traders to assume that 888 Holdings is an appealing target for the cash-generative bookie. Casino-on-Net, one of the most popular online casino sites, and Pacific Poker, the fourth largest Internet poker site, are both operated by 888 Holdings. Approximately half of the company’s revenues come from the U.S. Coincidentally, 888 Holding’s chief executive, John Anderson, was once an employee of Ladbrokes. 888 is trading on a prospective price-earnings ratio of 14, which would make it, according to stockbroker Killik & Co., one of the cheapest stocks in the online gambling sector. Shares of 888 Holdings floated at 175p in September and closed at 2.25p higher at 210.25p, valuing the FTSE 250 company at just over £700m. Apparently, it was a good day for online gaming and betting stocks overall. Banking on rumors that it too could be a takeover target for Ladbrokes or another bookmaker, share values of Spread betting group IG also rose, going up 6.25p to 180p in heavy trading. Analysts following the industry noted that stocks such as 888, IG, and PartyGaming (up 1.5p to 138p) are still under-owned by United Kingdom institutions. Posted on: January 13, 2006
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