AUTHOR: Jerry "Jet" Whittaker
TITLE: Party & Pacific Poker in US$3 Billion Merger Talks 
DATE: 5:58 AM
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BODY:
<p class="mobile-post">It was not only the share value of PartyGaming and 888 Holdings that
collapsed when both firms said they would cease taking customers in America.
The poker action at Party Poker and Pacific Poker has also drastically
dropped without the presence of U.S. players. One insider said, "The biggest
problem facing gaming companies is that each one's pool of players has been
dramatically reduced by the removal of the American market. Now when players
sign on, there are a lot fewer people to play against, which means even
those that are legally allowed to play are finding it less interesting."
Both the International Herald Tribune and U.K. Sunday Times reported in the
past 24 hours that executives from PartyGaming and 888 Holdings have held
exploratory merger talks to combine their pool of online players. The
insider added, "All the players have been talking to each other for weeks.
At one stage there were plans for attempting a multi-company merger but it
was decided that this would be too difficult and that one merger at a time
would be quicker." Big gaming companies are looking to acquire rivals that
have a strong European or Asian presence. For example, Party Gaming has been
linked with a deal to buy Gamesys, which is big on the Continent, and Victor
Chandler, the bookmaker that has the biggest player base in Asia.  Ten days
ago when Party Gaming released its "key performance indicators" for the
third quarter, Mitch Garber chief executive, told analysts the company was
in talks with several parties. Two weeks ago, Garber told The Sunday Times,
"Consolidation is, in my view, the most sensible way to grow the business
right now." 888 holdings released a statement saying it had held "various
preliminary discussions with third parties following suspension of its U.S.
activities," adding that there was no certainty that the discussions would
proceed to an offer being made. Party Gaming was floated on the London Stock
Exchange last year despite its prospectus containing 33 pages warning of
risks such as a block on money transmission and dependency on US players.
The firm earned 85% of its revenues from US clients using its internet
services. In the past month Party Gaming's shares have slumped 70% to 30p.
Over the same period 888 fell 24% and closed on Friday at 108p.</p>
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