The word is so strong that PartyGaming has excited the attanetion of the Takeover Panel

No less a respected news source as the The Sunday Times has claimed that merger talks are in progress between Party Gaming and the giant Austrian online gambling group Bwin - a deal estimated to be worth some GBP 2 billion.

The newspaper reported over the weekend that the two sides have been holding on-off talks since the summer. PartyGaming, led by chief executive Jim Ryan, is expected to be asked by the Takeover Panel to clarify the position before the market opens Monday morning.

A year after floating, Party Gaming suffered a huge setback when America made internet gambling illegal. Groups including PartyGaming closed their American operations and lost huge amounts of revenue.

"Speculation about consolidation in the online gaming sector has been rife in recent months," the newspaper report claims. "A tie-up between PartyGaming and Bwin would be logical given the former’s ambition to grow its presence in sports betting, an area where the Austrian group has particular strength.

"PartyGaming, based in Gibraltar, is best known for offering poker and casino games. It seems likely that if the two businesses can agree a tie-up, the deal would be structured as a merger of equals."

The Sundat Times quotes an insider who told it that discussions were at an early stage and there was no certainty that a deal would be agreed. “Everyone in the industry is talking to everybody else,” said the source.

Shares in PartyGaming closed on Friday at 256p, valuing the business at GBP1 billion. Bwin, which is listed on the Vienna stock exchange, has a market value of Euro 1.3 billion (GBP 1.2 billion).

In April this year, Party Gaming agreed a settlement with America’s Department of Justice to ensure that it would not face prosecution over its activities in the United States. It agreed to pay $105m (GBP 65m) as part of the arrangement. That will make it a far more attractive partner to Bwin.

The Times also records that gambling groups including London-listed 888 Holdings and Sportingbet as well as Sweden’s Unibet, have all been examining possible deals.

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