Ladbrokes In €30 Million Betdaq Deal

The UK’s biggest bookmaker Ladbrokes has agreed a €30 million deal to buy Global Betting Exchange Alderney (GBEA) and is expected to complete the acquisition by late February 2013.
GBEA is the parent company of Betdaq, whose owner Dermot Desmond is one of Ireland’s richest people with an estimated fortune worth €1.35 billion. Mr Desmond already has a 2% stake in Ladbrokes and it is believed €15 million of the €30 million agreed deal will be payed to him by way of shares.
Betdaq is the second biggest betting exchange in the world with €2.8 million in profits last year and gross assets worth €35.4 million. Both companies already have a business relationship, with Ladbrokes hedging their wagers by using the Betdaq betting exchange. By purchasing the company Ladbrokes is hoping that it will now be able to hang on to its customers who sometimes use market leader Betfair’s more efficient peer-to-peer model.
The deal is likely to suit both companies equally well as Betfair is 20 times the size of its nearest rival and Ladbrokes will now be seeking to invest in Betdaq so that it might better compete with the betting exchange behemoth. Following announcement of the deal, Ladbrokes CEO Richard Glynn explained that the acquisition would help Ladbrokes’ “strategy to grow digital revenues through investment in proprietary technology and delivery of best of breed products, providing a differentiated experience to customers.”
Despite the possibility of increased competition from Betdaq, news of the deal left Betfair’s share price largely unaffected and is currently down 0.6% at 664p. Meanwhile, Ladbrokes shares are presently trading up 2.18% at 210.60.
Commenting on the potential of the deal, analyst Daniel Stewart & Co said: “In our view, we think it may prove too early at this stage to assess whether or not the exchange will prove a success and provide the necessary turnaround in the fortunes of LAD Digital (online) business. It is possible in our view the exchange could lead to cannibalization to some degree on the other hand if it gains the necessary momentum it should prove a competitive offering against the largest exchange Betfair (NR).”