SportingBet ends talks to buy Empire amid customer fears
By Tom Bawden The Times Wednesday september 21 2005

SPORTINGBET, the online gambling operator, has ended discussions to buy Empire Online for £790 million amid concern in the CIty that the targeted company does not actually have any customers.

SportingBet failed to deny speculation that the poker website's that Empire Online runs - under the aegis of PartyGaming and 888 Holdings - means that it was essentially a marketing team without a customer base.

Fears that Empire Online could be much less value able than thought previously after the emergence of the "customer issue" sent the companies shares plunging 20%.

Paul Leyland an analyst at Seymour Pierce said "All that was being offered for £800 million was about 16 person ell and a marketing war with Party and Cassava (now known as 888). Empire offers an excellent marketing team, but it does not control its customers".

An analyst at Daniel Stewart & Co. the UK broker said that the lack of customers meant that SportingBet would have been buying a revenue stream that was largely controlled by other gambling companies.

One of Empires many lines of revenue is empirepoker.com a website that is technically a subsidiery of PartyGaming. PartyGaming actually runs the website for Empire which does not have a gaming platform. It takes a percentage of the Poker "pot" typically between 1% and 5% of the amount wagered - passing a portion of this onto empire.

Although "ownership" of the customers is a grey area analyst agree that they belong more to the PartyGaming and 888 than to Empire. At the same time because PartyGaming holds all the customer information relating to the EmpirePoker.com website any potential purchaser of the operation would probably need to talk to both companies. Analysts expert PartyGaming itself eventually to buy Empire Online for a much lower price than SportingBet was considering. PartyGaming would not comment on the potential acquisition yesturday.

SportingBet said " On september the 5th the board of SPortingBet confirmed that it was in discussion with Empire, which might or might not have lead to an offer and that discussions where at a very preliminary stage. SportingBet can now confirm that, by mutual agreement it has ceased discussions with Empire in respect of the potential offer."

SportingBets fell 17p to 326.5p while Empire stock lost 52p to close 202p.