GVC Holdings Makes New £1 Billion Offer for bwin.party
Who ever said corporate mergers and acquisitions wasn’t exciting? Well, my wife, for one, when I tried to tell her about this last night, but whatever. She doesn’t know what she’s missing. After making what looked to be the winning bid for bwin.party, then getting trumped by the rare underbid, GVC Holdings is grabbing the sledgehammer one more time, hoping to finally slam it down hard enough to ring that bell. In a press release issued Monday, GVC announced that it has increased its offer for online gambling giant bwin.party in an attempt to wrest it away from 888 Holdings.
bwin.party has been open to acquisition for some time now, but until this month, nothing had happened. But now that the dam has broken, it doesn’t look like the waters can be held back. It started on July 9th, when GVC Holdings teamed up with Amaya Gaming to make a 110p share offer for bwin.party, the parent company of partypoker. GVC is not a household name in the gaming industry – it does own one large brand, Sportingbet – nor is it big enough to afford the takeover on its own. Thus, it brought in Amaya Gaming, which itself bought PokerStars and Full Tilt Poker last year, to help with the bid.
While none of the players involved said anything about it, the prevailing thought was that the buyers would split up bwin.party, with GVC Holdings taking control of the company’s sports betting and casino games business and Amaya Gaming grabbing partypoker to add to its stable of internet poker rooms. It appeared that everything was a go, but 888 Holdings, operator of 888poker, swooped in on July 17th with a 104.09p per share offer for bwin.party. That was lower than GVC/Amaya’s, so 888 had no chance, right?
Wrong. bwin.party decided to accept 888’s offer, despite it being less lucrative. The probable break-up of the company by GVC Holdings and Amaya Gaming did not sit well with bwin.party. Additionally, the companies cited “synergies” between 888 and bwin.party, including the proximity of their offices, compatibility between their gaming units, and similar licensing deals.
Last week, though, several British media outlets reported that GVC might come back with yet another offer and that has now happened. GVC’s new proposal to bwin.party is for 122.5p per share, making the deal worth just over a £1 billion ($1.57 billion). Unlike its previous proposal, though, GVC has cut out Amaya Gaming, likely because bwin.party cringed at the prospect of its gaming units being separated (the rest of the industry probably would not have been happy about Amaya controlling so much of the poker market, either).
Thus, now that GVC Holdings is going it alone, it obviously can’t afford to spend over a £1 billion on bwin.party. As such, only up to 25p per share is going to be in cash, while the rest of the amount will be paid in new GVC shares. GVC will also get assistance in the form of a loan. From the press release:
The Company would finance the Proposal via a combination of the issuance of new GVC shares, to bwin.party shareholders, and a €400m senior secured loan provided by affiliates of Cerberus Capital Management, L.P. In addition, the Company intends to raise circa £150m through an equity placing of new GVC shares for cash in order to fund restructuring costs, the refinancing of existing bwin.party debt and for additional working capital purposes.
Now that GVC Holdings has three-bet…well, if somehow you can three-bet after your opponent actually bet less than you did…it will be interesting to see if 888 Holdings comes back with a juicier offer. One would think it is unlikely to happen, as 888 wasn’t expected to be able to beat GVC in the first place (and it didn’t, in terms of price), and GVC’s latest offer is 11 percent higher than its previous one. With the threat of an Amaya-assisted break-up of bwin.party off the table, bwin.party may decide the price premium is worth more than any potential “synergies” it may have with 888. Then again, maybe this still isn’t enough to sway them.
Should GVC win the day, the online poker landscape shouldn’t really change, provided the company doesn’t do anything nutty with partypoker. GVC isn’t known for its poker prowess, though, so who knows what may happen. According to PokerScout.com, partypoker is tied for sixth in the industry in terms of cash game traffic, boasting a seven-day average of 1,000 cash game players. 888poker is second with 2,100 cash game players. Amaya Gaming’s sites hold five of the top ten spots in PokerScout’s rankings; PokerStars still dominates with 14,500 cash game players.
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