Bwin.party Acknowledges Corporate Takeover Talks
Bwin.party officials have confirmed that the company has engaged in acquisition talks with an unspecified number of possible suitors, according to a brief, terse statement issued by the company today. The publicly-held bwin.party was obligated to acknowledge the acquisition talks after rumors regarding a possible takeover became public this morning, including a brief piece on the possibility by leading online UK financial news outlet Financial Times. Canada-based Amaya Gaming is believed to be one of the companies interested in acquiring bwin.party. Playtech is also among the companies reported to be among those pursuing bwin.party.
The brief business update by bwin.party acknowledges the “Media Speculation,” while also referring to the possible corporate takeover, hostile or not, as a “view to creating additional value for bwin.party shareholders.”
The complete text of the brief:
Further to recent media speculation regarding a possible bid for bwin.party, the Board of bwin.party confirms that it has entered into preliminary discussions with a number of interested parties regarding a variety of potential business combinations with a view to creating additional value for bwin.party shareholders. Such discussions may or may not result in an offer being made for the Company. However, as all such discussions remain at a preliminary stage, there can be no certainty as to whether or not they will result in any form of transaction with any party.
Further announcements will be made as and when appropriate.
Bwin.party’s declaratory hand was forced after the company’s moribund stock priced bounced upward overnight based on the acquisition rumors. Regular-share stock prices for the Gibraltar-based concern had hovered at barely over 100p (about USD $1.60) following years of decline and corporate losses, but jumped to about 125p overnight on the rumors.
An early-morning report on the Financial Times’ live-time “Alphaville” investment blog declared that Canada-based Amaya, parent company of online poker giants PokerStars and Full Tilt and also owner of the Ongame Network (which it had previously acquired from bwin.party), had made a 145p/share bid for bwin.party stock.
Bwin.party has been mired in red ink, particularly in regards to the company’s online-poker offerings, which declined year-over-year by 25% according to the company’s 2014 third-quarter reports. Bwin.party’s protracted decline in online poker circles is measured both in direct financials and in overall site traffic, where the company has fallen from second to sixth in global market share over the past two years.
Despite the company’s lagging poker fortunes, other revenue streams have held stable, with a sports betting boost traceable to the 2014 FIFA World Cup allowing the company to post a tiny gain in gross revenue for 2014, when compared to one year earlier. Nonetheless, the tiny revenue gain has not allowed the company to reverse its ongoing operational losses, with bwin.party’s share price having spent years in the tank as a result. The company’s concerns have included not only the possibility of a hostile takeover, but of stockholder dissent as well: Dissident shareholder Jason Ader led an internal revolt, calling for the resignation of some bwin.party directors.
The Ader story represents an interesting sideline to any takeover battle for bwin.party. Ader, a New York City native, acquired a 6% share in bwin.party prior to launching his shareholder battle, and was able to obtain a seat on the company’s board of directors. Ader is also on the board of Las Vegas Sands Corporation, the Sheldon Adelson-chaired company which has been strongly against the online gambling interests of firms such as Amaya and bwin.party itself. Bwin.party, for instance, is already a licensed software partner of New Jersey’s Borgata casino in that important US state’s fledgling online market.
As for Amaya, the profitable portions of bwin.party’s current operations represent an attractive compliment to its existing operations, including relative strength in European sports wagering offerings and the already existing bwin.party approval in New Jersey (though not in Nevada). Amaya has traditionally been an active player regarding acquisitions of various gaming groups; in addition to its ballyhooed $4.9 billion purchase of PokerStars and Full Tilt, it previously acquired Ongame, and currently is seeking to sell its Cadillac Jack unit of slot-machine and video-gambling titles.