Australia division the star for takeover target Sportingbet

The online gambling company said earlier this week that a £350m takeover approach at 52.5p per share from William Hill and smaller online betting firm GVC, undervalued the business and its prospects.

William Hill, which makes most of its money in Britain, is expanding overseas and is interested in Sportingbet’s operations in Australia and Spain.

Sportingbet declined to comment further on the bid situation, citing takeover panel rules. The potential bidders have until October 16 to make a firm offer. Its shares dipped in early trading yesterday, indicating doubts about whether a significantly higher bid would emerge.

William Hill employs around 3,000 staff in Yorkshire, including about 1,100 based in Leeds.

Underlying earnings – expressed as EBITDA – rose 11 per cent to £56.8m on revenues of £188.9m. However, the company posted an operating loss of £39.1m once a slew of one-off charges were included.

Chief executive Andrew McIver said the company had emerged from a year of transition in a stronger position, with its focus on countries where the regulatory framework for the growing online gaming sector was clear.

It cemented its position in Australia in 2011 by taking over Centrebet, the number four operator in the market. A company backed by GVC bought its Turkish language website.

“Our successful acquisition of Centrebet, which has out-performed our expectations, disposal of Turkey and introduction of regulation in our other key countries has resulted in over 80 per cent of the group’s revenue now being derived from regulated and/or taxed countries,” said Mr McIver.

Sportingbet said Australia now accounted for approaching 70 per cent of group revenues and almost all of the company’s profits. Sums wagered on Australian sports betting rose 82 per cent to £1.49bn, while annual savings after the acquisition increased to £15m from an original estimate of £5.2m.

Analyst Ivor Jones of Numis, who rates the stock a ‘buy’, said shareholders should be encouraged by the Sportingbet statement. “The Australian business, over ten years in the making, is profitably growing share in a growing market,” he said.

“In Spain, Greece and other European markets recession, regulation and taxation have conspired to sharply reduce profits.”