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PartyGaming is buying Empire Online's gaming business and all of Intercontinental Online Gaming's business and assets.

Neither company accepts bets from US citizens. PartyGaming was hit hard by the US ban on internet betting which came into force in October last year. Prior to the ban more than half of PartyGaming's revenues came from US gamblers.

PartyGaming picks up several brands including NoblePoker.com, EnterCasino.com and MissBingo.com. The deal should add to profits next year.

Mitch Garber, chief executive of PartyGaming, welcomed the addition of secondary brands, strong management and the support of the agreement with Playtech. The company will issue new shares to pay for the takeover.

PartyGaming will pay Empire Online 83m shares for its assets and almost 32m shares will go to Intercontinental Online. Based on average share prices over the last two weeks this represents $66.3m. But about $13m of this total will be kept in an escrow account and released in instalments dependent on performance.

The company has also changed the way it pays its executives because of the impact of the US ban last year. Chief executive Mitch Garber and chief finance officer Martin Weigold will get their hands on share options more quickly than previously agreed. Garber gets a minimum bonus of £2m if he stays in the job until December 2007.

Empire Online and PartyGaming held merger talks before but they ended in legal action from Empire Online.

The Partygaming press release is here.

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