Shares in 888 soar as Ladbrokes mulls bid

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Shares in the online gaming firm 888 surged yesterday after it confirmed talks about a possible bid from Ladbrokes, the bookmaker. However, the bookmaker was quick to deny that a price had been set and cautioned that it was by no means certain to take the plunge.

Ladbrokes sees advantages to a deal with 888, given that it would pep up the company's online offering and enhance its position in the casino and poker businesses. It also offers a business to business service, providing games for others and, crucially, a business to Government offering. The latter is important as countries ease regulation on gaming as they seek to generate tax revenues.

Ladbrokes would also be attracted by the fact that 888 is a more internationally diversified business than Ladbrokes, which is still mostly centred in the UK. However, 888 has still not yet drawn a line under legal issues from its former US business, a stumbling block that caused Ladbrokes to abandon a deal worth nearly £500m four years ago. This could mean that any offer made by Ladbrokes – which as a new owner would be liable for any legal issues – is made conditional.

There was speculation yesterday that leaks about talks between the two companies, said to be in the early stages, were more in the interests of 888 than Ladbrokes. 888 is rumoured to have held discussions with potential rival bidders, including Sportingbet and private equity-owned US gambling giant Harrah's, in addition to other overseas based gaming interests.

"It could be this flushes another bidder out of the woodwork," said one industry source. "They've been looking to do something for a while." Shares in the company finished the day strongly ahead, closing at 57.75p up 8.75p valuing the company at £200m. Ladbrokes was down 1.5p at 126p.