Damian Reece, business editor at the Telegraph (the paper that broke the story of Ladbrokes making a second run at acquiring online gaming operator 888.com), has described the proposed union as “two desperate punters putting £250m on red and crossing their fingers.” Reece also noticed a curious distinction between this proposed takeover and similar cases. Ordinarily, the opening ‘bid’ is loudly panned as unsuitable by the target company’s shareholders. Tellingly, in 888’s case, the reaction seems to be one of universal relief.
The reaction is also fairly positive amongst the rest of the online gaming industry. That is, except over at Microgaming, who are looking at a fairly Grinchy holiday season if this deal is consummated. If/when Ladbrokes switches over to 888’s poker network and casino platform – and let’s face it, why else would Ladbrokes be doing this deal – Microgaming loses its biggest B2B customer.
For Ladbrokes, the deal would definitely improve their online presence, but that’s sort of like saying the coronary patient whose condition was upgraded from ‘grave’ to ‘critical’ is feeling much better now. With 888’s fortunes having taken a serious tumble this year, Ladbrokes is not acquiring an industry leader. Until Ladbrokes acquires such a leader, questions will remain as to whether the company can compete with the online big boys.
The wild card in this takeover scenario is Caesars (ex-Harrah’s) and the online initiative they signed with 888 a while back. Is Caesars Interactive’s diminutive (figuratively and literally) CEO Mitch Garber – who, despite having convinced most of the gaming media that he’s built and/or run an online gaming company, has done neither — going to be happy getting his technology courtesy of Ladbrokes now?