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Thursday, October 06, 2005

Party gaming casino

PARTYGAMING, the world’s biggest internet poker group, will announce today an indicative price range for its proposed stock market listing that would value the company at between $8 billion (£4.3 billion) and $9.2 billion, The Times has learnt.

The price range, which will be followed by the publication of a prospectus, is within the predicted range of $8 billion to $10 billion. The figure is said to have been reached after Dresdner Kleinwort Wasserstein, PartyGaming’s adviser, sounded out as many as 200 institutions.

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The pricing for the flotation, which would catapult PartyGaming into the blue-chip FTSE 100 index, is understood to value the group on a multiple of 18 times its 2005 earnings and 13.3 times 2006 earnings. That is a slight discount to Sportingbet, its nearest quoted competitor.

However, some observers think that the group, which owns the PartyPoker website, will have to discount the price to do the float by the end of this month. PartyGaming will have to deal with several issues as it nears the float, not least the doubts surrounding the legality of internet gambling in the United States, which is the company’s biggest market.

Investors will also want to know why the company is floating when its cashflow is strong and it does not need to raise money for expansion or acquisitions. The fact that the four controlling shareholders will cash in 23 per cent of their holdings in the flotation and become billionaires will also raise eyebrows.