On Friday, Bwin.party’s board announced it had accepted GVC’s latest cash-and-shares 130p-per-share offer, which values Bwin.party at around £1.1b. Bwin.party chairman Philip Yea said there had been “a pretty even split” among shareholders who favored GVC’s higher-value bid over 888’s most recent offer but a “significant block of shares” had promised to support whatever decision the board recommended.
888, which had submitted a revised bid earlier this week that reportedly upped its offer from 105p per share to 115p, issued a statement saying its board of directors “cannot see sufficient value in Bwin.party to warrant a revision to its offer.” As a result, 888 confirmed that it is “no longer in discussions regarding the acquisition.”
888 executive chairman Brian Mattingley told the Financial Times his board had “looked and run several models several times and we were nervous … it may have been a transformational deal but it was too risky.”
Mattingley also claimed that he didn’t see the new GVC/Bwin as a competitor. “They will take what failed with Bwin and do more of it. They have the same platform, the same managers, the same marketing. They even still have Norbert [Teufelberger, Bwin.party’s CEO, who will stay with the combined group as non-executive director]. The guy who destroyed the value of the company is still in there.”
SPORTS BETTING BEHEMOTH
GVC CEO Kenneth Alexander told Reuters that the deal was necessary in a rapidly consolidating online gambling landscape. “I think unless you have scale you are going to struggle to compete.” The new and improved GVC “will create one of the market leaders in online sports betting,” with the vertical expected to account for 70% of the combined group’s revenue.
In a video posted on Bwin.party’s corporate site, Yea said the intention was to transfer customers of GVC’s Sportingbet brand to the Bwin platform. Yea noted that a lot of Bwin.party senior staff had already been through the troubled integration of Bwin and PartyGaming five years ago and the company “hope to attract [these staffers] to carrying on through and applying that experience to the task at hand.”
OH, THE IRONY
Yea acknowledged that GVC’s willingness to conduct operations in grey- and black-markets contrasted sharply with his company’s focus over the past few years, which saw Bwin.party exit a host of countries while preaching a newfound commitment to regulated markets (despite the legal uncertainty surrounding Bwin.party’s main market Germany).
Yea now says that having access to those grey/black markets will “produce cash flow to invest in the regulated and ‘to be regulated’ markets.” Translation: exiting those markets was a really dumb idea and we can no longer afford to pretend we’re whiter than white without the support of that questionable green.
Canada’s Amaya Gaming was originally part of GVC’s Bwin.party takeover plans, but bowed out after Bwin.party’s board reportedly expressed concerns over the complexity of the deal. Speculation had it that Amaya was looking to acquire Bwin.party’s struggling PartyPoker division, leaving GVC to focus on Bwin’s dominant sports betting operations. Speculation continues to swirl that GVC will now look to reduce some of the debt it’s taking on by selling PartyPoker to Amaya.
On Friday, Alexander told eGaming Review that he hadn’t spoken to Amaya since the two parties went their separate ways “but there is nothing in this deal that stops us from doing things in the future if both parties wish to.” Alexander said GVC’s plan was to continue to develop all of Bwin.party’s individual parts but “if people are interested in some of the individual assets of the large group then I’m happy to have a discussion.”
Alexander also revealed that GVC would apply for the necessary US gaming licenses. Bwin.party is currently operational in New Jersey’s regulated online gambling market, and has prospective deals with land-based partners in California and Pennsylvania, should those states ever pull the cork out and legalize online gambling.
THE KNIVES COME OUT
GVC’s acquisition, which will see Bwin.party shareholders owning 2/3 of the combined group, is expected to be complete by Q1 2016. GVC has promised to realize €125m in ‘synergies’ from the merger and Yea acknowledged that one couldn’t bolt together two companies of this size “without staff being potentially affected.” Yea himself will not be joining the combined group.
Alexander said Bwin’s dual HQs in Vienna and Gibraltar would continue to exist but GVC would cast a more critical eye on other locations where both firms had offices. Alexander said there was a lot of talent in both companies’ sports trading teams but some underperformers would inevitably receive their walking papers.
888 TO REUNITE WITH WILLIAM HILL?
Analysts are now strongly hinting that 888 should rethink its aborted union with UK bookies William Hill. 888’s top shareholders rejected Hills’ £750m takeover bid earlier this year but with Ladbrokes hooking up with Gala Coral Group, Betfair moving in with Paddy Power and now GVC marrying Bwin.party, 888 and Hills find themselves on the wrong end of scale.