Empire Online Declines as PartyGaming Bid Talks End (Update1)
Nov. 21 (Bloomberg) -- Shares of Empire Online Ltd. fell to a record as the company ended talks to be bought by PartyGaming Plc, its main customer, and said it plans to file a lawsuit over changes that PartyGaming made to its poker platform last month.
Empire dropped the talks after PartyGaming changed the terms of an initial all-stock proposal that valued Empire at 10 percent of the combined business, according to a Regulatory News Service statement released today. The new proposal was ``significantly different'' in its price and structure, Empire said.
It's the second time this year that talks to acquire Empire Online have failed. In September, Sportingbet Plc abandoned plans to acquire the Tortola, British Virgin Islands-based company.
``The termination of discussions with PartyGaming should eliminate much of the uncertainty in the Empire share price,'' said Richard Carter, an analyst an Numis Securities, in a note to clients. ``However, this has been replaced by uncertainty over the contribution from Empire Poker and the legal action.''
Shares of Empire Online fell as much as 9.5 percent to 57.5 pence in London. That was the lowest since the company sold shares to the public in June at 175 pence each. The stock was down 3 pence, or 4.7 percent, at 60.5 pence at 9:08 a.m. local time. Numis, Empire's brokerage adviser, has a ``buy'' rating on the shares.
Empire said it plans to ``institute and vigorously pursue'' legal proceedings against PartyGaming, which excluded Empire and other marketing partners from its upgraded poker platform.
Profit Forecast
PartyGaming Plc, the owner of the PartyPoker Web site, last week agreed to buy MultiPoker to gain ownership of one of its four partners. Arrangements with two of the remaining three ``skin'' partners, IntertopsPoker.com and Coral Eurobet, are ending.
Empire Online today repeated last month's forecast for net profit of about $53 million for the year ending Dec. 31. For 2006, the company expects earnings to be ``broadly in line'' with analysts' estimates, including $37 million from businesses such as Club Dice that don't have a relationship with PartyGaming.
Earnings from the Empire Poker business next year ``could be impacted by the nature of the ongoing commercial relationship between Empire Online and PartyGaming, other `skins' leaving the `skins' platform and the outcome of any legal action against PartyGaming,'' Empire Online said in the statement.
To contact the reporter on this story:
Paul Jarvis in London at pjarvis@bloomberg.net.
Last Updated: November 21, 2005 04:11 EST
Nov. 21 (Bloomberg) -- Shares of Empire Online Ltd. fell to a record as the company ended talks to be bought by PartyGaming Plc, its main customer, and said it plans to file a lawsuit over changes that PartyGaming made to its poker platform last month.
Empire dropped the talks after PartyGaming changed the terms of an initial all-stock proposal that valued Empire at 10 percent of the combined business, according to a Regulatory News Service statement released today. The new proposal was ``significantly different'' in its price and structure, Empire said.
It's the second time this year that talks to acquire Empire Online have failed. In September, Sportingbet Plc abandoned plans to acquire the Tortola, British Virgin Islands-based company.
``The termination of discussions with PartyGaming should eliminate much of the uncertainty in the Empire share price,'' said Richard Carter, an analyst an Numis Securities, in a note to clients. ``However, this has been replaced by uncertainty over the contribution from Empire Poker and the legal action.''
Shares of Empire Online fell as much as 9.5 percent to 57.5 pence in London. That was the lowest since the company sold shares to the public in June at 175 pence each. The stock was down 3 pence, or 4.7 percent, at 60.5 pence at 9:08 a.m. local time. Numis, Empire's brokerage adviser, has a ``buy'' rating on the shares.
Empire said it plans to ``institute and vigorously pursue'' legal proceedings against PartyGaming, which excluded Empire and other marketing partners from its upgraded poker platform.
Profit Forecast
PartyGaming Plc, the owner of the PartyPoker Web site, last week agreed to buy MultiPoker to gain ownership of one of its four partners. Arrangements with two of the remaining three ``skin'' partners, IntertopsPoker.com and Coral Eurobet, are ending.
Empire Online today repeated last month's forecast for net profit of about $53 million for the year ending Dec. 31. For 2006, the company expects earnings to be ``broadly in line'' with analysts' estimates, including $37 million from businesses such as Club Dice that don't have a relationship with PartyGaming.
Earnings from the Empire Poker business next year ``could be impacted by the nature of the ongoing commercial relationship between Empire Online and PartyGaming, other `skins' leaving the `skins' platform and the outcome of any legal action against PartyGaming,'' Empire Online said in the statement.
To contact the reporter on this story:
Paul Jarvis in London at pjarvis@bloomberg.net.
Last Updated: November 21, 2005 04:11 EST
