Earlier this year, in March, the NASDAQ listed Shuffle Master Inc. reached an agreement with Bwin.Party Digital Entertainment to purchase the latter’s online poker group, Ongame Network Ltd. At the time, the agreed price for the network was €19.5 million.
Today it was announced that Shuffle Master is pulling out of the deal to purchase the company. As a result, its share prices dropped 6% to $12.58. The group said that it was dropping the deal because of poor economic conditions in Europe, which would have meant an increase in investment costs and a blow to Shuffle Master’s profitability.
According to a brief statement issued by the Chief Executive Officer of Shuffle Master, Gavin Isaacs regarding the termination of the deal, it had become evident to the group that Ongame’s operations post-acquisition would not be able to achieve the near-term results which Shuffle Master had initially expected. He said that the online poker network would have required a larger ongoing investment than anticipated.
The move is seen as a blow to Shuffle Master’s plans to enter into enter the internet gambling arena, especially at such an important time in the history of online gambling in the United States. Nevertheless, analysts congratulated Shuffle Master’s management for making a “tough decision” and pulling out of a deal which did not make financial sense.
Isaacs acknowledged that Shuffle Master was not as well positioned to enter the United States should the country’s federal government make moves to allow internet gambling. He reminded investors that the group still had a very valuable portfolio of proprietary content which could still be packaged into an online table game offering.
Click for a list of Ongame Network poker rooms.