888 Sweetens Offer for bwin.party
Do you ever go on eBay to try to buy something you *really* want, but don’t actually *need* and then get into a bidding war with some other yahoo who thinks he has more right to it than you do? Do you get to the point where you know you are spending too much, but you think to yourself, “What’s one more dollar?” And then you tack on another dollar and another dollar and another dollar. Rather than being just like you, just someone who wants that Raymond Burr autographed picture for his dad, your bidding opponent becomes an evil baby-puncher.
We may be starting to get to that point with GVC Holdings and 888 Holdings in their tug-of-war over bwin.party. The latest news comes directly from bwin.party, which announced on Tuesday, September 1st, that it has received another acquisition proposal from 888 Holdings. Neither company, however, has made public any of the financial details of said proposal. In a press release, bwin.party said:
Further to its announcement on 27 August regarding a proposal from GVC Holdings PLC (‘GVC’), the Board of bwin.party (‘bwin.party’) confirms it has also now received a revised proposal from 888 Holdings plc (‘888’). This revised proposal is subject to a number of pre-conditions (which can be waived in whole or in part by 888).
The Board of bwin.party is evaluating this proposal, together with that received from GVC, and intends to consult with its key shareholders in the coming days before making a final determination as to which proposal is in the best interests of shareholders. A further announcement will be made in due course.
The Board’s unanimous recommendation of 888’s offer, which was announced on 17 July 2015, remains unchanged by this announcement. Documentation in respect of this offer was posted to shareholders on 28 August 2015.
Bwin.party, parent company of partypoker, has been coveted by 888 for years, but it only recently that the bidding war between 888 and GVC has erupted. On July 9th, it was announced that GVC Holdings, with help from PokerStars and Full Tilt parent Amaya Gaming, had proposed an offer of 110p per share for bwin.party, valuing the potential deal at about £907 million. Just over a week later, another proposal was announced, this one from 888 Holdings. While it was actually lower than GVC’s, at 104.09p per share (£858 million), bwin.party’s Board of Directors recommended it to shareholders, citing corporate synergies and what was perceived to be a safer deal, as 888 didn’t need to bring in outside assistance to finance the purchase. It was also thought that GVC and Amaya would break up bwin.party, something that likely did not sit well with the Board.
On July 27th, GVC Holdings announced that it had increased the price in its proposal, this time to 122.5p per share (£1 billion total). It also got rid of Amaya, obtaining a loan from Cerberus Capital Management. GVC has since been in continued talks with bwin.party to go over various issues for which bwin.party needed clarification. 888 addressed this last week, saying in press release:
The Board of 888 (the “Board”) notes the announcement made this morning by bwin.party concerning a potential offer for bwin.party. The Board continues to believe that the combination of the 888 and bwin.party businesses announced on 17 July 2015 (the “Proposed Transaction”) under the 888 management team would generate significant value for both sets of shareholders.
Following a detailed due diligence exercise, 888 made an offer comprising a significant cash component along with an approximate 49% ownership interest in the combined business. This offer was unanimously recommended by bwin.party. The Board continues to believe that its offer is of significantly greater intrinsic value than the proposal outlined by GVC Holdings PLC on 24 August 2015.
The Board notes that it remains the unanimously recommended bidder and continues to work towards the completion of the Proposed Transaction. 888 publishes its interim results for the 6 months to 30 June 2015 on 28 August 2015 and anticipates publishing a prospectus and shareholder circular in relation to the Proposed Transaction on the same day.
Despite the higher bid from GVC, bwin.party’s board has not changed its recommendation. One might guess, though, that 888 has been reading the tea leaves and believes that bwin.party is getting ready to go with GVC or else it wouldn’t have outbid itself. It will be interesting to see if 888 comes in above GVC’s latest offer, which would be a significant leap from 888’s original price, or if it will try to simply get in the ballpark, hoping that bwin.party will forego a few pounds in favor of the synergies it already likes.