* Ladbroke signs deal with software specialist Playtech
* To take on 40 staff to form a new digital marketing team
* Playtech success fee based on Ladbrokes earnings in 2017
* Ladbrokes shares up 7 pct, touch highest since 2008
(Writes through with details, share moves, analyst comment)
By Isla Binnie
LONDON, March 11 Ladbrokes Plc,
Britain's second-largest bookmaker, has positioned itself for
a stronger push into online and mobile gambling through a tie-up
with a specialist software developer.
Shares in Ladbrokes jumped to their highest in five years,
encouraged by the prospect of the company taking a bigger share
of the fast-growing online market via the deal with Playtech Ltd
, a developer of software platforms for online poker,
bingo and other games.
The betting firm will take on 40 staff from Playtech to form
a new digital marketing team, the companies said on Monday.
Ladbrokes' customers will get access to Playtech's 200 casino
games this year, before their gaming assets are eventually
merged onto one platform.
Ladbrokes, a familiar sight in Britain's town centres with
2,200 retail outlets, has struggled to keep up with the online
offering of UK market leader William Hill Plc.
Earlier this month, William Hill took full control of the
internet venture it previously ran with Playtech, buying out the
latter's stake for 424 million pounds ($633 million) as it looks
to expand online.
The online gambling sector is seeing a wave of consolidation
and deals amid signs that the U.S. is readying to legalise it.
Online gambling firm 888 announced two U.S. agreements
Ladbrokes said the deal with Playtech should help spur its
own growth, but declined to say how much it expected to profit.
"I'm very confident that over the next five years this is
going to allow us to accelerate (underlying earnings growth),"
Ladbrokes Chief Executive Richard Glynn told Reuters, noting the
company's online offering would become more comparable to what
is available from its stores.
NO WIN, NO FEE
Following its William Hill windfall, Playtech will be
entitled to royalties generated under a software agreement with
Ladbrokes and a "success fee" based on 27.5 percent of any
increase in Ladbrokes core earnings for 2017.
"This is to replicate the financial success of other joint
ventures including William Hill," Mor Weizer, chief
executive of Playtech, told Reuters. He added that basing the
calculation on 2017 earnings would give the collaboration time
to take effect.
Playtech will receive an early instalment of its success fee
if increases to core earnings of 35 million pounds, 70 million
and 100 million are achieved in any of the three years up to
Analysts approved of the "no win, no fee" arrangement, which
limits financial risk while giving both companies a strong
reputational incentive. "It is a high-profile deal and as such
neither party can afford for it to fail," Peel Hunt said in a
The deal boosted shares in both companies, which ranked
among the top gainers in the FTSE 350 index of leading
stocks. Ladbrokes shares were up 6.9 percent at 240.7 pence,
touching their highest level since mid 2008, having risen almost
50 percent in the past six months.
Shares in Playtech climbed 3.4 percent to 571p in early
trading before easing to 567p.
($1 = 0.6699 British pounds)
(Editing by Rosalba O'Brien and David Holmes)