Ladbrokes is targeting online growth as it prepares to make an offer for 888, the online casino.
News reports emerged over the weekend that Ladbrokes – a bookmaker for horse racing, football and other events – was preparing a £240 million bid for the Gibraltar-based online company, though this has not been confirmed. Ladbrokes today said it was in “very preliminary discussions” with 888.
An acquisition by Ladbrokes would expand the company’s online presence, an area in which it was described as “weak” by several analysts and newspaper reporters.
Ladbrokes rival William Hill has already taken aggressive steps in this area, launching a joint venture earlier this year with Playtech, a developer of casino software.
Morgan Stanley analyst Vaughan Lewis today wrote in a note that an acquisition of 888 by Ladbrokes could help the company gain “significant capabilities” in technology.
He added that Ladbrokes and 888 could save £25 million a year between them on technology and marketing costs.
Ladbrokes’ new chief executive, Richard Glynn, has on several occasions said he would work to improve the company’s presence online.
In July, he reorganised management at the online division, and a month later the company told investors that it would spend money on “enhancing” its IT to support stores and online sales. It is deploying a workforce management system from Alcatel-Lucent to help cut costs and manage schedules.
The company offers sports betting and games on its website, but does much of its business in store. It has 2,220 betting shops across the country.
Online gaming generated £85.6 million revenues in the six months to 30 June, compared to £332 million over the counter in the UK.
In November, Ladbrokes announced it would offer gaming and gambling sites in nine languages, processing bets in 17 currencies. It also runs a virtual racing game in China, after teaming up with technology firm AGTech.
Ladbrokes had attempted to buy 888 four years ago, but pulled out after legal action in the US targeted online gambling sites.
Investors in 888, which operates only on the web, reacted positively to the news of a possible bid by Ladbrokes, sending 888 shares soaring by over 20 percent. Other betting firms, including Sportingbet, are said to be considering bids for 888, but no bids have been confirmed.