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In a major turn of events, 888 Holdings has won the heated acquisition battle for foundering European online gambling giant bwin.party, besting a bid from rival GVC Holdings. Bwin.party’s executive board has recommended the 888 Holdings bid, announcing their decision in a lengthy announcement on Friday, despite the 888 bid having a slightly lower overall value than the one put together by GVC.
According to the required stock-market announcement issued by bwin.party, the total value of the deal is pegged at approximately approximately £898.3 million. The total represents all of bwin.party’s entire issued and to-be-issued share capital in a cash-and-shares transaction. For each existing share of bwin.party stock, its holders will receive 39.45 pence in cash and 0.404 new shares of 888 stock. Those amounts are subject to a “mix and match” facility included in the deal, meaning that each shareholder can elect their own proportions, and the final balance of cash and shares for each shareholder will be determined based upon the total of requests.
Among the assets which will move to 888’s post-deal “Enlarged Group” are two significant sports betting brands, PartyBets and sports.bwin.com. The deal still has to be approved by bwin.party shareholders, though that approval is likely, as the total purchase represents a very slight premium over bwin.party’s current share price, and at least a 15% premium over the value of the company’s shares earlier this year.
Despite that, in turning down the offer from 888 Holdings, which included a financial partnership with major rival Amaya Gaming, bwin.party’s execs rejected a buyout with a slightly higher overall value. The competing GVC bid was valued at roughly £920 million, but included some leveraged bonds in the proposed swap, in addition to possibly opening up bwin.party to some increased regulatory difficulties.
In opting for the 888 offer over the one from GVC/Amaya, which carried a top-line value of about 110 pence per share, the bwin.party announcement said this:
Having considered the proposals received from interested third parties, as well as bwin.party’s prospects were it to continue as an independent company, the bwin.party Directors believe the Offer represents the most attractive combination of value and certainty for bwin.party Shareholders now, with exposure to secure additional value from the expected future synergies from combining 888 and bwin.party.
bwin.party Shareholders will be aware that GVC Holdings plc (“GVC”) has submitted a proposal to the bwin.party Board at a headline price of 110p per share. Whilst GVC’s proposal has many attractive features and is at a modest premium to 888’s Offer price, its proposal also carries additional execution risks. The bwin.party Directors have concluded, after further work with GVC and its advisers and after careful consideration, that 888’s Offer provides a higher degree of certainty for bwin.party Shareholders and that GVC’s modest incremental premium to 888’s Offer is not sufficient for the bwin.party Board to recommend GVC’s proposal over 888’s Offer.
The announcement went on to detail several specific reasons why the sale to 888 should be viewed as the best overall option, including that the 888 bid represented “an attractive mix of cash and equity” in 888’s ongoing “Enlarged Group”. The announcement repeatedly cited existing synergies between bwin.party and 888 that will allow the greatest net value from the deal to be achieved.
The synergies include overlap in Gibraltar, Israel and Romania. Some relationships already exist as well, including the fact that the Bwin-branded Foxy Bingo product already runs on an 888 technology platform. Bwin.party will not be broken up under the terms of the deal, but will instead continue as a series of semi-independent, bwin- and Party-branded units.
Many or most of bwin.party’s rank-and-file workers are expected to be retained as well. As for CEO Norbert Teufelberger, he’ll be moving into a consulting position with the new company which will last for a maximum of three years.
Commenting on the deal, 888’s executive chairman, Brian Mattingley, said, “This is a transformational opportunity for 888 in the consolidating online gaming industry, which is expected to grow significantly over the coming years. The Enlarged Group will benefit from significantly enhanced scale, an improved product offering as well as significant cost and revenue synergies. It delivers a substantial premium to bwin.party Shareholders whilst also giving them the opportunity to participate in this value creation opportunity. 888’s management have a well-established track record of delivering outperformance since 2011 and we look forward to working with our new colleagues to create a global leader.”
Over at bwin.party, chief Philip Yea said, “A year ago we set out to explore industry consolidation opportunities whilst working to improve our core business. We have made substantial progress on both counts and our announcement today marks the first step in a new phase in our short history. Bringing our two groups together will generate substantial financial synergies for the benefit of both sets of shareholders and create a strong player with the breadth of product, brands and geographic coverage to grow faster than either business would be able to achieve stand-alone. Drawing upon a wealth of experience accumulated over the past few years, our management team looks forward to working with new colleagues to realise the considerable potential that this business combination presents.”