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Party Gaming in Surprise Takeover Bid for Empire Online – November 5th, 2005

Casino NewsParty Gaming, the world’s biggest internet poker company, surprised the market yesterday by confirming that it had made a bid approach to Empire Online — less than four weeks after it was partly responsible for a collapse in Empire’s share price.

It is thought to be bidding about 135p a share for Empire, equivalent to almost £400 million. That is well below the 175p it floated at in June and just half the 270p-a-share offered by Sportingbet before the collapse in online gambling stocks — again sparked by PartyGaming — caused the deal to collapse.

One analyst described PartyGaming’s approach as “decidedly cheeky”, adding: “The reason Empire’s shares are as low as they are is more or less down to one company. That company is PartyGaming.”

Empire, which is a so-called “skin”, makes money from directing poker players from its own websites to PartyGaming’s poker platform. The announcement last month that PartyGaming would be creating a new platform exclusively for its own customers, leaving skin customers to play on an inferior platform, sent Empire’s shares down by a third in a single day.

But a source close to PartyGaming dismissed as “absolute nonsense” suggestions that it had deliberately sought to drive down the share price, pointing out that the company had stated quite clearly in its flotation prospectus that it was reviewing its relationship with skins.

It emerged yesterday that Coral Eurobet, the bookmaker that has just been acquired by Gala Group, has decided to remove its online poker operation from PartyGaming’s platform. The move will further damage Empire, as it will now be one of just three skins on the platform, severely reducing liquidity. The news sent Empire shares 2p lower to close at 113½p, despite speculation that Sportingbet may re-enter the fray.

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