Empire Poker Announces Legal Action Against Party Gaming

by Lou on November 23, 2005

Empire Online, which operates Empire Poker, announced legal action against their former partner, Party Gaming. This announcement was made following the collapse of a deal between the two companies that would have resulted in the acquisition of Empire Online by Party Gaming.

In a recent statement issued by Empire, discussions were terminated for these reasons: “Following a protracted due diligence process and continued delays in the timetable, Party Gaming has made a revised proposal that is significantly different both in terms of the price and structure and at a level that cannot be recommended.”

Empire’s legal action is based on perceived damage inflicted on them by Party. According to Empire, they served as a conduit for new players to join the Party Poker, which enabled Party built a large player base, while Empire received a piece of revenue its players brought in. Once Party excised Empire and other skins, Empire’s player base was substantially reduced and they have already warned analysts that their financial results will be lower than expected.

Party Gaming said the rejected bid valued Empire Online at 60p per share, but earlier media reports indicated that an all-share proposal made last month was more than twice that. Empire Online’s shares have been trading at approximately 65p this week, but their stock was as high as 288p in the last 52 weeks.

Party recently purchased Multi Poker, one of their other three skins, and made Intertops Poker an affiliate, essentially absorbing that poker room. The fourth skin, Coral Eurobet will migrate to another poker network, with Party’s assistance.This is not the first time talks have ended between Empire and a potential suitor. In September, Sportingbet ended negotiations predicated on a bid of 270p per share for Empire. What a difference a few weeks makes!

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