888 Holdings Founder’s Heirs Cash Out Shares, Spooking Investors

888 Holdings took a hit on the London Stock Exchange on Wednesday after the heirs of one of its founders sold the entirety of their shares in the company.

Aharon Shaked’s heirs sell stake in 888

The late Aharon Shaked, who came up with the idea of an online casino at a dentists’ convention in Monte Carlo. (Image: Globes.co.il)

The O Shaked Shares Trust, which holds the shares of deceased founder Aharon Shaked on behalf of his family, sold 46.3 million shares in the company, or around 12.9 percent of the company’s total share capital, for around $112 million. The trust offered no reason for the sale.

It had, however, previously sold 40 million shares, back in June, for around £108 million, at a time when the share prices were higher.

Subsequently, the value of stock fell on the news that 888 was being investigated by the UK Gambling Commission for allowing self-excluded gamblers to continue to play. The company was fined a record £7.8 million for its compliance failures, which it blamed on a technical glitch.

888’s shares actually rallied following news of the fine because investors had initially feared it could have lost its license to operate in the UK, one of its biggest markets.

But news of the sell down caused shares to dip, dropping 6.1 percent by the end of trading on Wednesday.

A Dentist’s Dream

Aharon Shaked died in 2010, after battling serious illness. He and his brother, Avi, became two of Israel’s richest men, after founding 888 in 1997 and then floating it on the London Stock Exchange in 2005.

A former dentist, Aharon claimed he came up with the idea for an online casino after watching delegates clamouring to gamble at the Casino Monte Carlo during a dentist’s conference in the Monaco capital.

Despite his belief in his vision, neither he nor his brother knew how to gamble and only had the sketchiest knowledge of casino games.

Having mugged up on casino gambling, the brothers joined forces with two other Israeli brothers, software developers, Shay and Ron Ben-Yitzhak, to form 888, and mortgaged their homes to pay for the site’s development.

Modest Man

Avi Shaked became the better known of the two, forging a political career in Israel, unsuccessfully twice running for parliament under the slogan “a socialist and a millionaire.”

Aharon was less interested in the limelight and, later, did not even take an executive role in the company. A 2005 Financial Times interview portrayed him as a modest man devoted to charity work and investing in start-ups.

“I have a lot of money. I don’t go to eat at the better restaurants or go to buy a new car because I’ve already done all those things,” he said.

 

Share Now: