Ongame sale falls behind schedule
Bwin.party reveals that talks are "at an advanced stage" but unlikely to be completed before end of year " Germany remains "significant risk" ahead of Thursday's crunch Ministers meeting says analyst.
The sale of bwin.party’s Ongame poker network is unlikely to be completed before the year-end target set by senior management, the operator has revealed in a pre-close trading update this morning.
After initially being described as a “surplus asset” when the merger between bwin and PartyGaming was completed in March, the combined entity confirmed that a formal process to sell the network had begun.
According to Pokerscout, Ongame has the fifth-highest liquidity of all networks and standalone sites, with a seven-day average of 2,150 daily cash game players at any one time.
However, while rival network Entraction was acquired by IGT over the summer, no deal has yet been sealed for the network which cost bwin £474m in 2005.
In a recent eGaming Review poll, 43% of readers predicted that no buyer would be found for Ongame and it would have to be written off, but bwin.party confirmed today that “The sale of Ongame’s B2B business has attracted a number of interested parties…[and the]…sale process is at an advanced stage.”
This morning’s update also confirmed that the operator “ ranked fourth in this year’s eGR Power 50 “ had applied for licences in Spain and Denmark and expects to be “among the first group of operators to become licensed” in both territories.
It also drew attention to this Thursday’s meeting of the 16 German Minister Presidents, with bwin.party hoping that 15 of the Länder will revise their existing proposal which the operator deems non-compliant with EU law.
Bwin.party said in today’s update: “Whilst we welcome the move to regulate the online gaming market in Germany, this must be in a consistent and coherent manner in-line with EU law that also enables licensed operators to compete effectively with black market operators. Any other approach, if sustained, will create a commercially unviable market and result in consumers being driven outside the regulated framework.”
Simon French, analyst with Panmure Gordon, retained his firm’s ‘Hold’ recommendation, suggesting there would be no change from the 15 Länder and explaining: “We believe this is inconsistent with EU law and so we expect companies to continue to operate in Germany under a dot.com model while applying for a license in Schleswig-Holstein.”
There was also a ‘Hold’ recommendation from Peel Hunt, with analyst Nick Batram explaining: “Germany remains a significant risk and the early financial performance in Spain remains uncertain.”
Meanwhile analyst James Hollins of Evolution Securities retained his firm’s ‘Add’ recommendation on the basis of a “good” trading update, but noted that “Caution needs to prevail until there is greater clarity on the likelihood of negative regulation emerging in Germany.