Online gaming group 888 is moving higher on hopes that it can agree a takeover by Ladbrokes, despite suggestions that price could be an issue.
As it reported a 6% rise in operating income for last year, the group said its talks with Ladbrokes were continuing and an announcement would be made as appropriate. Not very revealing, but enough to send its shares up 0.5p to 44.25p.
Analysts are not especially convinced, however, and pointed out that the statement included news that the earn out it would pay to the sellers of Wink Bingo - which it bought in December 2009 - would be at the top end of expectations, due to a better than expected trading performance. The company said it was in talks about "the structure and timing of such a payment to ensure the group meets its obligations."
In a sell note Peel Hunt said:
A strong fourth quarter driven by significant marketing investment can't paper over the cracks of a disappointing year for the group. 888 does look a reasonable consolidation candidate but we don't believe the group is in a position to maximise value. This is amply demonstrated by the need to restructure the Wink earn-out commitment.
888 is in advanced discussions with the vendors of Wink Bingo regarding their earn-out commitment. This could be as much as
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