UPDATE 1-GVC plans big cuts to Sportingbet cost base

Tue Mar 26, 2013 5:37am EDT

* GVC plans job cuts after Sportingbet acquistion

* Acquired business to at least break even by 2014

By Keith Weir

LONDON, March 26 (Reuters) - Online gaming group GVC Holdings plans to cut costs at the Sportingbet businesses it acquired earlier this month to bring them to break even by next year.

Some of the 200 people employed by Sportingbet in its London office will lose their jobs and the new owners are also unlikely to renew a shirt sponsorship deal with English second tier soccer club Wolverhampton Wanderers.

"We will be ripping out substantial amounts of central cost from Sportingbet," GVC CEO Kenneth Alexander told Reuters.

"All sponsorships are under review," he added.

GVC, listed on the AIM market, was the junior partner in a 485 million pound ($737 million) deal completed this month with leading bookmaker William Hill to buy online gambling group Sportingbet.

William Hill is taking on the Australian and Spanish assets, while GVC will acquire Sportingbet's operations in 24 countries in an agreement that cost it around 31 million pounds.

"It is our aim by 2014 to get Sportingbet to break even or better," said Finance Officer Richard Cooper. Takeover documents refer to restucturing costs of up to 24 million euros as GVC cuts the overheads it acquired with Sportingbet.

GVC had to pay Sportingbet 27.3 million euros in 2012 relating to its acquisition the previous year of the company's Turkish operations and these payments will now cease.

The latest deal enabled GVC to expand in Britain, Greece and eastern European markets including Czech Republic, Poland and Russia.

GVC is more willing than larger rivals to operate in markets where licensing regulations are less clear cut and regulatory risks consequently higher.

GVC, whose brands include Casino Club and Betboo, said EBITDA profit rose 84 percent to 15.5 million euros in 2012.

Revenues were up 34 percent to 59.6 million euros.

The company has no plans to join the main stock exchange, citing higher costs which it said would reduce returns to its shareholders.

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