PokerStars Looking for a Buyer; 888.com Another Possible Target?

2005 saw online poker rooms lining up to enter the public markets, resulting in billion dollar paydays for many of their top executives. This year looks to be starting out in similar fashion, with the internet’s second largest poker room, PokerStars, seeking a suitor.

The Scheinbergs, the Israeli family that founded the company, has appointed the City merchant bank, NM Rothschild, to either sell the PokerStars to the right buyer or to simply float the company on the London Stock Exchange. The target price is more than $2 billion.

The Scheinberg family, and primary founder Isai Scheinberg, in particular, is said to own about 75 percent of PokerStars, with the company’s employees owning the other 25 percent.

The most likely scenario is not a public offering, as rivals such as PartyGaming conducted last year, but rather a straight sale in the second half of the year. One company that had been discussed as a potential buyer in 2005 and is now one of the lead names mentioned, is 888 Holdings, which owns 888.com, a popular gambling site, as well as Pacific Poker, one of the largest online poker rooms. 888 went public in September, and was rumored to have done so to raise the money to purchase PokerStars. 888 is also controlled by Israelis, the Shaked and Ben Yitzhak families.

Some analysts think that traditional brick-and-mortar gambling companies might be interested in PokerStars, as well, as a means to bolster their online presence. William Hill and Rank Group are two names that have been tossed around.

While 888 Holdings has been rumored to be a potential buyer of PokerStars, it may also be a buy-out target, itself. 888 shares hit a record high Thursday on word that rival Ladbrokes may be interested in acquiring the large internet gambling concern. Ladbrokes customer base is primarily European, while 888 focuses mainly on North American players, so the combination could be quite a strong one. Ladbrokes has been busy lately, as it recently purchases Hilton hotels.

Originally published January 5, 2006
Updated January 6, 2006