PartyGaming to Control Bwin in $1.76 Billion Deal

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PartyGaming Plc plans to acquire Bwin Interactive Entertainment AG in a reverse takeover valued at about 1.13 billion pounds ($1.76 billion) to create the world’s biggest publicly traded online gambling company.

The merged company, which had reported sales of 682 million euros, will be 51.6 percent owned by Vienna-based Bwin, with PartyGaming of Gibraltar holding the rest, the companies said in a statement today. The new company would be listed in London and have leading positions in online poker, sports betting, casino and games such as bingo, they said.

"From an industrial point of view this is both an offensive and a defensive move," said Gianmarco Bonacina, an analyst with Equita SIM SpA in Milan. "In Europe, Bwin and PartyGaming are losing market share in poker versus Pokerstars and Fulltilt, so the combination will protect them. In the U.S., the move is offensive. They want to attack that market and are in a better position if they combine."

The transaction reflects pressure faced by gaming companies as competition intensifies with the opening of markets in Europe and the U.S. Governments are starting to allow online gambling companies outside their borders to offer services in domestic markets and bring currently illegal acts under the umbrella of taxation and regulation.

PartyGaming shares rose 20 percent, the most since December 2008 after the announcement.

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