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GVC Considering Counteroffer after bwin.party Opts for 888 Bid

All the action regarding this week’s presumptive sale of bwin.party might not be over yet. Though bwin.party’s executive board has put its backing behind a takeover bid by 888 Holdings, spurned bidder GVC Holdings may mount a last-ditch effort to snag bwin.party.

The news comes from several British financial-news outlets, all citing well-placed (but unnamed) officials of GVC or its investment partners.  And one would-be partner who likely won’t be part of a revised bid for bwin.party is GVC’s previous silent partner, Amaya Gaming.

One of several reasons given for bwin.party’s decision to go with the 888 Holdings offer, compared to the one from GVC and Amaya that was valued a couple of percent higher, was that under the GVC / Amaya plan, the various units of bwin.party’s current operations would have been broken up, dismantled and reorganized at will.

gvc-holdings-logoGVC, which operates the SportingBet platform while also offering business-to-business services, would have retained bwin.party’s various sports betting and online-casino operations.  Amaya, meanwhile, would have picked up prominent second-tier site PartyPoker in addition to a smaller bwin-branded online poker site, which these days runs as a skin on Party’s dedicated network.

Adding PartyPoker to the market share already controlled by Amaya, owner of PokerStars and Full Tilt, would have tilted all of the online-poker world, giving Amaya a virtual monopoly in several European jurisdictions.

Even more to the point, the transition to 888 was a better fit for bwin.party’s existing operational units.  The oft-cited “synergies” present between 888 and bwin.party include closely-located workforces, similar multi-jurisdictional licensing, and even strengths in the same general families of online-gaming segments.

All that, according to those “looking forward” statements that are part of the deal-selling prospectus that bwin.party issued on Friday, adds up to far more than the difference between the 888 and GVC bids.  According to that lengthy advertisement, the deal with 888 is expected to save “US$70 million per annum (before tax) by the end of the 2018 financial year.”

Given that the difference between the 888 and GVC bids was only on the order of $30-40 million, it’s enough of a reason by itself for bwin.party to have chosen the lower 888 offer.

So GVC wants to sweeten its offer, and in the process get rid of some of the secondary risk that would have been introduced into the equation had the highly-leveraged Amaya Group remained involved.  London’s The Telegraph quoted an unidentified GVC spokesman as stating, “We’re reviewing our options and we’re not ruling anything out.”

The Telegraph’s update, as with several of the other UK news reports, then suggests that GVC is making the rounds of possible partner investors, but with only GVC itself as the primary purchaser.  But what isn’t being said is that whatever GVC comes back to the table and offers had better be another £100 million or so higher, or it’s simply not worth it for bwin.party to backtrack.

GVC also has the option of attempting a more hostile takeover, by making a higher offer directly to bwin.party’s individual shareholders.  The bwin.party executive board that unanimously recommended accepting the 888 offer collectively holds only a little over 12% of bwin.party’s shares, meaning that there’s still technically plenty of room for other investors and investment blocs to go another direction.  Again, however, it’s unlikely to work unless the GVC offer represents a significant premium over the existing 888 bid, while mitigating the risk that the earlier GVC-Amaya bid entailed.  That’s a tall order; it’s just as likely that GVC’s spokespeople are making a little bit of noise before wandering off to lick their wounds in quiet.


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