Empire Online calls off buyout talks with PartyGaming, threatens to sue latter

[clevfan]

Empire Online calls off buyout talks with PartyGaming, threatens to sue latter

Published on : Mon, 21 Nov 2005 14:05
By : Amy Watts
Money.co.uk

LONDON: Online gaming firm Empire Online Ltd. announced that its talks with larger rival PartyGaming Plc. for a possible takeover had broken down and that it is taking the rival to court.

In a statement, the company said its directors had explored whether legal action can be initiated in relation to damage caused to it by the conduct of companies within the PartyGaming group in separating the poker system used by PartyGaming players from that of its "skins". "Having received legal advice, the directors intend to institute and vigorously pursue legal proceedings as soon as possible," the statement added.

Empire Online, which runs the portal, Empirepoker.com, and makes money by directing gambling traffic to its group websites, said PartyGaming had also tried to cut the value of an offer for the company. "Following a protracted due diligence process and continued delays in the timetable, PartyGaming has made a revised proposal that is significantly different both in terms of the price and structure and at a level that cannot be recommended."

Empire Online's stock had lost as much as 78 per cent of its value since 6 September, when PartyGaming issued a profit warning in view of slower customer growth. There was a second fall on 10 October, when PartyGaming said it is moving its own gamblers to a new integrated operating platform cutting down its dependence on "skins" like Empire.

PartyGaming had initially given an all-share offer that valued Empire Online at 10 per cent of an enlarged group -- 135 pence a share or approximately 400 million pounds. Empire Online said PartyGaming "made a revised proposal that is significantly different both in terms of the price and structure". While Empire Online did not disclose the value of the second offer, PartyGaming later confirmed its offer was worth roughly 60 pence a share.

PartyGaming said it is ringfencing its players, separating the platforms on which its customers and those directed through Empire Online play. Empire players will not be able to jump between different games and there would be a smaller pool of players.

Empire Online said it has received several commercial strategic approaches and it would pursue talks with the parties involved. Its businesses like Club Dice and Noble Poker, which had no ties with PartyGaming, are on course and will make profits after tax to the tune of 21.5 million pounds. However, Empirepoker could have some impact.

Empire Online share prices fell 9.5 per cent to 57.5 pence in London, the lowest since company sold its shares to the public in June at 175 pence a share.

PartyGaming recently acquired one "skin", MultiPoker, and said it was buying the player database of IntertopsPoker. Another skin, Coral Eurobet, said it was leaving the PartyGaming platform.

[Mad Mad Euro Cow]

wow, did they ever miscalculate the market place.