Saturday, August 20, 2011

Wynn Resorts May Purchase Bwin.Party Digital Entertainment, by Greg Tingle - 20th August 2011

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Earlier this year, PartyGaming and bwin merged to create Bwin.Party Digital Entertainment, which is traded on the London Stock Exchange under the symbol BPTY. In an news article that appeared in The Independent last Tuesday, it was noted that since the two online gaming giants merged, the combined company’s share price has dipped by nearly half. While part of the drop might be due to a slowing economic environment worldwide and so no action might be needed, other entities felt that an infusion could be in the offing.

The Independent added that Wynn Resorts, headed up by Steve Wynn, has emerged as a possible investor in the newly formed gaming giant, which is focused on the European market and continues to feature two separate online poker rooms. Readers will recall just before Black Friday in the United States, PokerStars and Wynn Resorts announced that, once a gaming license was secured in the United States, the two companies would team up to launch Poker Stars Wynn.

Following Black Friday, in which the founders of PokerStars were indicted on charges that included money laundering and bank fraud, the deal with Wynn was called off as you would expect.

The news outlet cautioned, however, that investors might wait for the gaming environment in the United States to be sorted out first: "Not everyone agreed with the chatter, however, with one trader saying acquisitions in the sector were unlikely until there was further clarification over the potential regulation of online gambling in the U.S."

On Thursday, shares of Bwin.Party closed at 106.50 in London. Other rumored "aggressors," as the Independent calls prospective investors, include William Hill, which is also publicly traded on the London Stock Exchange. Shares of BPTY stood above 160 pence in April, but have since dipped.

One poster on the TwoPlusTwo forum, questioned whether the rumors of a Wynn takeover were plausible: "So the newly merged Bwin.Party will sell to Wynn before even taking advantage of all the millions of Euros they will make in the first two years by virtue of the their merger synergies?"

Despite the merger, PartyPoker.com remains the flagship site of its own network, while bwin makes its home on the Ongame Network alongside rooms such as Betfair.

Caesars Entertainment, one of the principal competitors of Wynn Resorts, has partnered with 888, also a publicly traded company in London. Prior to Black Friday, Full Tilt Poker teamed up with Fertitta Interactive, whose ownership group has strong ties to Station Casinos. Along with the PokerStars - Wynn deal, the latter fell by the wayside once the U.S. Department of Justice took action in April.

Other members of TwoPlusTwo continued to cast doubt on the validity of The Independent’s report. One player wrote, "Party has never had any interest in selling. This feels like an absolute recycle of the previous such rumor that they were going to be bought out by Harrah’s. Unsurprisingly, it turns out there was never such a thing on the table and the only connection was former Party CEO Mitch Garber moving to Caesars Interactive."

Rumors have also persisted that the Ongame Network could be sold outright. To that end, Sharecast.com noted in a recent article, "Bwin.Party, the world's largest online gaming group, already has its poker network, Ongame, on the auction block. The sale is expected to generate between 20M and 30M Euros ($28.5m to $42.7m), a modest figure reflecting the loss of players the network will incur through the sale."

But could a deal between Wynn and Bwin.Party be finalized before online poker is legalized in the United States? And will it matter? This week, the New York Post published an article stating that online poker legislation could be coming sooner rather than later. One source told the Post, "I think there is becoming a feeling in Congress that this is something that needs to be regulated and be done. I believe there is a possibility a bill will pass towards the end of the year."

Media Man will be following the story with weekly reports.

*The writer has conducted b2 with Bwin.Party Digital Entertainment and Betfair.

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Tuesday, August 16, 2011

Gaming And Financial Market Report: Investors take a flutter on Bwin.party bid talk - 16th August 2011

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Takeover talk was on the cards for Bwin.party yesterday, as investors mulled over whether to take a gamble on the online gaming group after rumours emerged it could be in line for an approach from the US.

The company has existed in its current form only since March, when the merger between PartyGaming and Austria's Bwin was completed. Since then, however, a steady slide – exacerbated by the sharp falls seen across the markets in the past few weeks – has resulted in its share price plummeting by 45 per cent.

The move has prompted chatter that the world's biggest listed online gambling group may become a target, and yesterday vague speculation suggested the casinos group Wynn Resorts, whose chief executive is the Las Vegas billionaire Steve Wynn, could be a potential aggressor.

With the gossip claiming a possible bid could reach as high as 170p a share, Bwin.party managed to touch 107.8p during trading before closing at 105.7p, a rise over the session of 1.7p.

Not everyone agreed with the chatter, however, with one trader saying acquisitions in the sector were unlikely until there was further clarification over the potential regulation of online gambling in the US.

The recent rumours came after mutterings last week suggested potential aggressors for Bwin.party could come from closer to home, with William Hill – up 1.9p to 224p – one of the names linked.

Those in the City returning to their desks after the FTSE 100's volatile movements last week would not have been blamed for being somewhat fearful over what the days ahead would hold, yet the top-tier index ended up powering forwards 30.55 points to 5,350.58, its third consecutive session on the rise.

Nonetheless, traders were still cautious. "We are not out of the woods yet," said one, who added that he would feel more confident if the banks managed a sustained rally as well. That was certainly not the case yesterday as – with nerves raised ahead of today's key meeting between German Chancellor Angela Merkel and France's President Nicolas Sarkozy on the eurozone crisis – the sector was left in the red.

Following reports suggesting "ring fencing" proposals could be tougher than anticipated, Barclays dropped 3.85p to 183.35p, while Lloyds Banking Group was 0.59p behind at 33.23p. Meanwhile, HSBC fell 4.6p to 547.2p despite being picked by JP Morgan Cazenove as one of the more attractive stocks after the recent sell-off.

Saying that "equity markets are oversold and [we] see many signs of panic", the broker added that "indiscriminate selling is offering great opportunities if one can look through the current extreme volatility."

Also among its picks were Amec, which finished 43.5p stronger at 949p, and Xstrata. The latter was lifted 21.5p to 1,092.5p, and – with data from Japan showing its economy for the second quarter had shrunk less than feared – the rest of the miners were also rising.

SABMiller pushed up 15p to 2,105p after Nomura raised its glass to the Grolsch brewer and toasted its emerging markets exposure. Cutting its growth expectations for the amount of beer consumed in Western Europe and US, the broker pointed out that around 84 per cent of SABMiller's profits come from outside these regions and raised its recommendation to "buy" as a result.

However, Nomura's analysts were less keen on Diageo, dropping its advice to "neutral", thanks to its new estimates that spirit volumes Stateside will rise only 1 per cent next year, although the owner of Smirnoff vodka and Bell's whisky still ticked up 11p to 1,189p.

Down on the FTSE 250, there was a definite appetite for Domino's Pizza as the pizza delivery company – recently the subject of bid rumours – surged forwards 24p to 486.8p, helped by Peel Hunt upgrading its rating to "buy".

As well as claiming that investors now have "a rare second chance to buy into Domino's iconic marketing enterprise", the broker's analysts added that they would "also take seriously recent social developments which, even after calm has been restored, may result in a subtle shift between the considerations for going out as opposed to staying at home".

The wooden spoon on the mid-tier index was taken by Michael Page, with the recruiter dropping sharply as it released its interim results. The company ended up shedding 32.4p to finish at 368p after saying it was being knocked by hiring freezes among the European banks, several of which have recently announced large job losses.

It was a good session for the explorers operating off the coast of the Falkland Islands, with Rockhopper increasing its estimates for its Sea Lion discovery. As a result it spurted up 19.25p to 237p on the Alternative Investment Market, while Desire Petroleum – which operates in the same region – was 2.25p higher at 19.25p.


Sportingbet chatter a rare ray of light in a gloomy market; UK Report...

Takeover tittle-tattle engulfing the internet gambling industry provided a welcome distraction on an otherwise miserable morning in the markets today.

Sportingbet, at present being courted by Ladbrokes, rose 3.3p to 53.7p as investors bet that a deal is imminent. Sportingbet's rival GVC Holdings said it is in exclusive discussions with the company about buying its Turkish language website. According to Evolution Securities, a sale of the site would "pave the way for a Ladbrokes takeover [of Sportingbet]."

Recycled bid speculation also pushed Bwin.party Digital Entertainment into first place on the FTSE 250 winners' list. The ludicrously named gambling group is rumoured to be in the sights of either bookmaker William Hill or a predator from across the Atlantic, Wynn Resorts. Gossips named a price of up to 170p per share for an approach: that's already 10p more than they were dreaming about last Friday. Bwin.party, formed from the merger of PartyGaming and Austria's Bwin, surged 7.4p to 113.1p.

UBS also gave the stock a boost, noting that it is trading at levels last seen during the market panic which ensued after the collapse of Lehman Brothers. That is, according to the big-hitting bank, despite the prospect of €55 million (£48.3 million) of "merger synergies", the demise of a major rival (Full Tilt Poker) and better-than-ever prospects for re-entering the US poker market.

But analyst Simon Whittington added that first-half results at the end of the month are likely to be lacklustre and may provide an even better buying opportunity. He is a buyer of Bwin, and has a 185p price target.

Shares in London ended their three-day winning streak after disappointing German GDP data renewed investors' fears for global growth. The FTSE 100 fell 55.16 points to 5295.42, dragged down by mining stocks because of their exposure to economic growth. Xstrata dropped 35½p to 1057p, Kazakhmys lost 28p to 1022p and Chilean copper producer Antofagasta shed 34p to 1230p.

Car parts maker GKN was the worst performer on the top flight though, off 7.5p at 194.7p, as auto stocks were sold-off amid concerns that the economic slowdown will hit demand.

Only a smattering of blue-chips managed to post any gains. They were mostly "safe haven" stocks: drug-makers Shire and GlaxoSmithKline ticked up 14p to 1965p and 5p to 1282p respectively, and gold miner Randgold Resources climbed 60p to 6240p.

Recruitment firm Harvey Nash was 4p up at 72p as investors applauded a 40% jump in first-half profits. Polo Resources surged 0.4p to 5.3p after doubling its proposed special dividend to 2p per share. It comes after the mining investment vehicle sold its stake in Caledon Resources.


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