Online Gambling Giant PartyGaming Buys Empire Online - 02-14-06

February 14 - Online Gambling company PartyGaming announced today that it has reached agreement with Empire Online Limited to acquire the EmpirePoker.com skin and other associated white label and affiliate agreements, together with the withdrawal of all legal claims by EOL against the Group, for a total cash consideration of $250 million...

The agreement is conditional upon the approval of EOL shareholders and PartyGaming has received irrevocable powers of attorney from EOL shareholders to the effect that their votes will be cast in favour of the necessary resolution in respect of a total of 163,999,358 EOL ordinary shares, representing approximately 56 per cent. of the issued share capital of EOL. PartyGaming has agreed to acquire the business, assets, player databases and intellectual property relating to EmpirePoker and AceClub.com, including the EmpirePoker brand and the EmpirePoker website.

In the year ended 31 December 2005, the gross profit before administrative expenses attributable to the assets being acquired was approximately $38.7 million, although following the launch by PartyGaming of the new operating platform on 8 October 2005, the profitability of EmpirePoker declined materially. In the quarter ended 31 December 2005 the gross profit before administrative expenses attributable to the assets being acquired was approximately $5.0 million. The balance sheet value of the net assets was less than $0.1 million as at 31 December 2005. In the 90 day period to 31 January 2006, EmpirePoker had 69,402 active poker players.

The transaction is expected to be earnings enhancing in the current financial year1. In advance of the completion of the 2005 audit, PartyGaming has made a preliminary assessment of the fair value of the consideration relating to the business and assets to be acquired and to the settlement of the outstanding claims brought against the Group by EOL. Accordingly, under International Financial Reporting Standards, PartyGaming expects to incur a non-recurring charge in the region of $150 million in the year ended 31 December 2005 in respect of amounts attributed to the settlement of disputes arising from the separation of PartyPoker players from EmpirePoker and all of the other third party skins in October 2005.

Richard Segal, Chief Executive of PartyGaming, said today: "This acquisition brings our skins strategy to a close and consolidates our leading position in online poker ahead of the launch of the fully-integrated, Party-branded platform. The introduction of Blackjack last October marked the beginning of our cross-selling strategy; the integrated platform will enable PartyGaming to take the cross-selling of games to a new level." The Group's preliminary announcement of results for the year ended 31 December 2005 will be made on 28 February 2006.

Click to visit PartyPoker.com.

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