Hilton Hotel Sale Could Create Independent Ladbrokes
Hilton Group Plc (HG.L), which owns the rights to the Hilton name outside the United States, is in discussions to sell its hotel business to U.S.-based sister company Hilton Hotels Corporation (HLT) for an estimated £3.6 billion. If the sale goes through, it would unify the Hilton brand for the first time since the companies split in 1964 and create a massive international hotel operator that could rival Starwood, InterContinental and Marriot.
The deal would also provide the means for a de-merger of Hilton Group's bookmaking subsidiary Ladbrokes, which could then become the largest quoted bookmaker on the London Stock Exchange in terms of market capitalization. Being freed from the Hilton Group would permit an independent Ladbrokes the freedom to accept Internet wagers from the United States if it were to release certain American members of its members.
Any deal to sell the hotel business to Hilton Hotels Corporation could take several weeks of due diligence, but there is already much speculation that one of Ladbrokes' first moves could be an attempt to acquire Rank Group, the £2.5 million owner of Mecca Bingo and Grosvenor Casinos. A combined Ladbrokes-Rank organization would take a structure similar to newly merged Gala-Coral Eurobet in that it would operate a range of gambling services under the new British regulatory regime, including betting shops, casinos, bingo halls and remote gaming. There is, however, also much anticipation that several large private equity firms may soon approach Hilton Group with an offer to purchase Ladbrokes.
Shares in Hilton rose 41p on Friday to close at 345.5p.
Betfair Delays IPO, CEO Resigns
British betting exchange Betfair's board of directors has taken the advice of its financial advisers, Goldman Sachs and Morgan Stanley, by opting to delay its anticipated float on the London Stock Exchange during the first quarter of 2006. Delaying the float will enable the company to resolve a few issues that could potentially limit its valuation. For example, how the Treasury intends to tax betting exchanges in the future remains a major uncertainty that should be clarified in the near future, and postponing the float should give the company more time to adequately react and prepare an investment portfolio. Another likely factor for the delay is the apparent recent decline in investor faith in online gambling stocks.
It was expected that a Betfair float would have gained a valuation of £700 million to £1 billion. Following the decision to delay the float, CEO Stephen Hill, who strongly favored floating on schedule, resigned effective immediately to pursue other interests. Hill had served as Betfair's CEO since June 2003. Non-executive chairman Sir Robert Horton will take over Hill's responsibilities until a replacement can be appointed.
Tipp24 Floats at Top End of Sale Range
Shares in German online lottery operator Tipp24 (2296124.F) began trading on the Frankfurt Stock Exchange on Oct. 12. Shares were issued at 20.50 euros per share (at the very top of its 16.50-20.50 range) and gained 3 percent throughout the day to close at 21.10 euros. The offering delivered 95.8 million euros for the company, 55 million of which will go to shareholders. The company intends to use the new capital for acquisitions that will help it obtain new gaming products.
Faith in OPAP's Stihima Plans
Smith Barney has lifted the target share price of Greek betting monopoly Organization of Football Prognostics (OPAPF.PK) to 30 euros from 27.70 euros because it is confident in OPAP management's plan to rejuvenate fixed-odds betting game Stihima. Smith Barney has therefore kept its rating for OPAP at "buy." The Greek government sold 16.4 percent of its holding in OPAP to foreign and local investors in mid July. The government earned 1.26 billion euros through the offering--the highest amount ever from a Greek privatization equity deal.
Playtech Appoints Advisors
The Sunday Times reports that Playtech has confirmed rumors of possible flotation or sale plans by appointed stockbroker Collins Stewart to explore its strategic options. The company has an expected value of about £500 million.