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GVC Holdings, fresh off having its offer to purchase bwin.party rebuffed when bwin.party execs recommended a lower-valued offer from 888 Holdings instead, isn’t done with its efforts to obtain the struggling Gibraltar-based firm. In the latest twist in this heated takeover battle, GVC is in the process of firming up new financing in the hopes of making an increased bid for the company, perhaps as early as next week.
Two things have changed in regards to GVC’s bidding efforts. First, GVC — which owns the SportingBet brand as well as providing business-to-business services to other industry clients — will sweeten its bid for the bwin.party package. The original bid of 110 pence per share, valuing the total company at about £906.5m. That was better than 888’s offer of 104.09 pence per share, but as these things go, not enough better. Existing synergies in the form of business relationships and shared markets, plus what was deemed as a “safer” investment deal, led bwin.party’s execs to opt for the slightly lower 888 offer.
The new bid? 120 pence per share, a full 10 pence per higher than the previous offer. That kicks the total package up to somewhere around £990 million. It’s quite possibly enough to overcome all those “synergies” that bwin.party execs touted when issuing their preference for the bwin.party bid last week.
Second, GVC has apparently jettisoned Canadian online-gaming giant Amaya Gaming as a primary investment party. The new offer, per several financial reports, has GVC hooking up with a US-based private-equity group, Cerberus Capital Management. Cerberus already has a toe in the online-gaming market, being a minority shareholder in Coral Group (Gala Coral), which announced a significant merger with Ladbrokes on Friday.
Cerberus is one of those equity-firms that specializes in turnarounds, or rescuing distressed companies, and on that marker, bwin.party certainly qualifies. Weekend reports in such British market stalwarts as the London Times and the Financial Times indicate that some bwin.party shareholders were upset with the lower bid from 888 receiving the go-ahead, and asked GVC to consider sweetening the deal.
Whether those investors include dissident bwin.party shareholder Jason Ader, a New Yorker who owns a little over 5% of bwin.party, hasn’t been publicly specified. Yet Ader is certainly one of the shareholders who pushed for a sale of the company, and he also has proven business connections to Cerberus via other deals. So that link remains a possibility.
It also should be noted that the 888 bid must still be approved by a majority of those very same bwin.party shareholders. Should they turn down the existing 888 bid in the face of a re-upped offer from GVC, it would represent another episode in this ongoing tale.
It’s even possible that GVC would do a turnabout if and when a purchase of bwin.party became reality. Yet another consideration that bwin.party exec cited among those “synergies” was the implied promise from 888 that bwin.party would remain whole. Under GVC’s plan, GVC and SportingBet would have taken over the bwin.party sports-betting and casino units, while the struggling online-poker divisions would have gone to Amaya, owners of PokerStars and Full Tilt.
It’s too soon to entirely rule out Amaya’s interest in PartyPoker under the renewed scenario. If the sweetened GVC-Cerberus bid is finalized, offered and accepted, they might still decide to chop off those online-poker units and sell them to Amaya, the likeliest waiting buyer. For a lot of different reasons, Amaya would love to buy PartyPoker should that unit ever become available.
The expected bid involving Cerberus came together too late on Friday for any of the firms to formaly acknowledge it in a securities-related statement, with the last investment pressers from both GVC and bwin.party dating from last Monday, when GVC acknowledged it was considering the sweetened bid. However, the process has certainly moved on. London’s Daily Telegraph quoted an unidentified bwin.party spokesman, who said, “The board has recommended an offer from 888 and we are working towards getting that done. Should GVC or anyone else put forward an attractive, fully financed and deliverable offer then of course the board will consider it against 888’s current offer.”
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