PartyGaming new bid to buyout Empire

[Sniper]

PartyGaming in early bid talks with Empire

LONDON (Reuters) - Online casino and poker room PartyGaming (LSE: PRTY.L - news) made a preliminary bid approach to troubled rival Empire Online (LSE: EOL.L - news) , but analysts questioned talk on Thursday of a 400 million pound price tag.

Empire is both a rival and a partner of PartyGaming, using PartyGaming's online poker rooms for players it attracts via its own website www.empirepoker.com.

But last month, Empire warned net profit would fall 10 percent below forecasts after PartyGaming ringfenced its own poker players, preventing players from "skin" companies like Empire from playing with them in the same Internet poker room.

The announcement follows media stories on Wednesday saying PartyGaming, owner of www.partypoker.com, was in talks to buy Empire for 400 million pounds, a figure that analysts found surprising.

"Empire is just 30 or 40 marketing people," said one analyst who declined to be named. "That means PartyGaming would be paying 10 million pounds per person."

The figure was reported by the Dow Jones (news) news agency, quoting sources close to the situation.

It is not the first time Empire has been in bid talks.

In September it said it had received an 790 million pound approach from bigger rival Sportingbet (LSE: SBT.L - news) , boosting its shares to an all-time high of 287 pence.

But after Sportingbet completed due diligence and those talks broke down on September 20, its shares have rapidly declined. They were up 7.4 percent to 124 pence by 9:06 a.m., valuing the group at around 365 million pounds.

Investors' main concern is that Empire Online does not truly own its customers and they will slowly migrate to PartyGaming.

"Any offer proposal would depend upon, in particular, PartyGaming being satisfied as to a number of material pre-conditions, including due diligence and the prospects for Empire's business," PartyGaming said in a statement.