Bwin and Party Gaming Merger Talks Stalled

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Merger talks between Bwin Interactive Entertainment AG and Party Gaming have stalled. The companies have been negotiating a merger for many months, however the talks between the two may have collapsed.

Hannes Androsch, Chairman for Bwin's Supervisory Board and the largest single shareholder for the company, was reported by Austrian magazine, Trend, to have said: "In the end, talks with the other party have not led to the desired outcome."

Subsequently, Bwin stated that Androsch had been misquoted and they issued an updated statement, saying: "he would like to clarify his statement as follows: 'It is true that up until now, talks have not led to any specific outcome.'" Analysts reported that this deal could have resulted in a wave of consolidation in a fragmented industry.

Androsch claims that talks between the two companies are continuing. Rumors regarding the negotiations between Bwin and Party Gaming began to surface late last year. If the deal between Bwin and Party Gaming is successful, it could have huge ramifications for the online casino affiliate marketing industry, where currently the Bwin and Party Gaming brands hold a large share of the industry.

Norbert Teufelberger, Co-Chief Executive Officer of Bwin, stated: "Bwin wants to tackle the task of entering the United States with a competent and local partner." "We are holding talks to do this." Trend Magazine said that Bwin was currently looking for a joint venture partner in the US and that it was considering selling a minority stake of up to 11 percent to a company based in San Francisco.

In May, Bwin cut its full-year forecast after they posted lower than expected first quarter earnings. Higher betting duties resulted in first quarter earnings of $39.04 million before taking into account interest, tax, depreciation and amortization.

While speculation still surrounds the status of the talks between Bwin and Party Gaming, it has been suggested that a merger of this magnitude could transform the industry and any future negotiations. Party Gaming is listed at £1.1 billion, while Bwin is the largest e-gaming company, listed at €1.4 billion.

Party Gaming aims to be in the top three of its four main verticals. It acquired Gamebookers in 2006 and bought the bingo company, Cashcade last year. It is also looking for a sports betting platform. The merger would also be expected to help Party Gaming's position as the third largest poker business.

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