Online gaming specialist weighs up sale move

INTERNET GAMBLING software specialist Cryptologic is considering the possibility of a sale of all or part of the business in a strategic review announced yesterday.

The Dublin-headquartered company said it had asked Deloitte Corporate Finance to assist with a strategic review of the business, which lost €14 million last year.

Its statement said that the review “will consider a number of strategic options, including the possibility of an offer being made for the company or a disposal of part of the business”.

It added that the board stressed that there can be no certainty that it will attract any offers. It is understood that no potential bidder has made an approach to the company, formal or informal.

Cryptologic, which develops and sells casino and slot-machine-style internet games, and licenses them to businesses such as Paddy Power, Betfair and Ladbrokes, has been struggling to return to profit since 2009, and is battling falling revenues.

The review is being carried out against a background of consolidation in the sector as a whole. Partygaming, the business behind Partypoker and its related websites, will next week merge with European sports betting group Bwin.

According to the prospectus promoting the paper-for-paper deal, that business will have combined revenues of around €700 million and assets in the region of €1.2 billion.

European Commission estimates forecast the European internet betting market will be worth €12 billion by 2013.

Cryptologic began cutting costs last August and, when reporting full-year results for 2010 earlier this week, said it had succeeded in reducing annual expenses by $30 million to $47 million.

However, the company said that growing revenues was a priority for the business. Last year, sales were down a third at $26 million from $39.8 million.

Chief executive Brian Hadfield left the company in August, and chairman David Gavagan stepped into the role on an interim basis, and is still acting in this capacity.

The company was founded in Canada, where is still has part of its key software development operations, but moved its corporate headquarters to the Republic in 2007 as US online gaming restrictions meant more of its business was concentrated in Europe.

Its primary listing is on the Toronto stock exchange. The company said yesterday that the board would update shareholders on the review as soon as it was appropriate to do so.