Gambling Operator Predicts Wave in 'Merger Bids'.

The online gambling giant 888 has predicted that this year will see the greatest number of mergers seen within the industry since its inception, as companies consolidate to save from going under in the current financially unstable economy; 888 are themselves searching for companies to acquire.

Partygaming, a public limited company that is listed in the FTSE-250, has recently been in talks with their Austrian rivals, Bwin regarding their possible mergers.

Gigi Levy, the chief executive of gambling giants 888 has said that a deal between Partygaming and Bwin- who are both industry leaders in their respective countries- could trigger a wider trend that will see gambling providers merging in the hope of creating larger, more powerful companies.

Levy said: "Once somebody goes ahead, it will happen very quickly."

He further went on to confirm that the Gibraltan-based company, 888, was in ‘advanced’ talks with another, smaller, company concerning its acquisition into the 888 group, and that there were further talks between other, larger, companies but that these had not advanced too far as yet.

If the merger between Partygaming and Bwin were to go ahead, they would effectively be creating an online gambling company worth in excess of $4 billion (or £2.55 billion). This means that their rivals will be looking to ways of ensuring that they maintain a powerful footing in the industry, and this will probably lead to further acquisitions and mergers. These mergers will be even more important if the United States reverses its online gambling ban and the Americans begin to add their clout once more to the gambling industry forcing the rest of the world to stand firm.

Levy has also confirmed that 888 are currently seeking to do more deals because of the awareness of the coming trend towards ‘super-casino operator groups’ resulting directly from mergers such as Bwin and PartyGaming.

"The synergies between any two big operators would be around $40-50 million," said Levy.

888 are stipulated to have around $60m of cash available for reinvestment "leaving the group in a sound position to exploit further M&A opportunities when they become available" he said.

A member of the FTSE-250 said yesterday that 888 had seen their profit margin grow by around 14% in the last quarter of 2009, totalling a massive $68 million. This huge surge in profit is largely due to new customers joining up as the recession begins to ease.

A vast majority of those customers who signed up also spent more in their first few weeks of play than is usually seen, and overall, customer play was up by 5%.

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