GVC Holdings Makes $1.55 Billion Counter-Offer to Purchase Bwin Party Digital Entertainment
The news a couple of weeks ago that 888 Holdings had won the competition to buy Bwin.Party might have been premature. 888 Holdings’s rival in a buyout has reentered the field with a better offer than one which was turned down earlier in July. To hear one major investor in Bwin.Party, though, the bidding likely is not over.
GVC Holdings entered a $1.55 billion bid for Bwin.Party Digital Entertainment, in an attempt to beat a rival $900 million offer (sometimes reported as $1.3 bilion) from 888 Holdings. Bwin.Party accepted the deal from the 888Holdings, though this latest offer could muddy the waters.
The earlier offer from GVC Holdings and Amaya Inc. was for $908 million, but was declined. The current $1.55 billion offer from GVC does not have Amaya Gaming, the owner of PokerStars and Full Tilt Poker, as a partner. The earlier offer was deemed as “too complex and with less attractive growth prospects”, according to Channel News Asia.
Consolidation of Gaming Market
The continued attempts to buy out Bwin.Party is the latest in a series of moves to consolidate the online gambling market. Last week, Gala Coral and Ladbrokes announced a $3.4 billion all-share merger. Online gaming executives are wanting to either consolidate or get out of the market, because of heavier regulations and more taxes in the United Kingdom. The Point-of-Consumption Tax is continuing to have major repercussions, with some gaming companies not interested in continuing alone.
Analysts from Davy Research believe the offer changes the equation for the Bwin.Party board of directors. If so, the Davy Research believes 888 Holdings itself is likely to enter its own counter-offer.
Davy Research Data
Davy Research released the following analysis: “This is a real statement of intent from GVC. The proposed premium over the accepted offer by 888 is such that the bwin.party board will probably have no choice but to reconsider its acceptance of the 888 offer. We would be surprised if 888 does not come back with a counter-offer of its own.”
GVC Holdings said the latest offer would include new GVC shares, along with a $443 million loan from Cerberus Capital Management. GVC also said Amaya Gaming would not be a part of the second offer. The original offer had Amaya Inc. picking up some of Bwin.Party’s sports betting assets, a level of complexity which Bwin’s board felt was too complex for their tastes.
Jason Ader Is Leaning Towards 888’s Offer
Despite having the biggest bid on paper, activist investor Jason Ader said he still views the offer from GVC Holdings as “inadequate” and would vote for the 888holdings offer as it stands. Ader’s word holds a great deal of sway, because he is one of the top 5 investors Bwin Party. Also, he holds two of the seats on the board of directors, because he won the right last year to sit on the board and appoint someone else to a seat on the board, as well.
The latest GVC offer appears to be at 122.5 pence per share. This consists of 25 pence in cash and the remaining cash at 97.5 pence in new GVC shares. The deal sounds like it is 18% higher than 888’s offer price of 104.09 pence, but the fact investors are being asked to take more speculative stocks makes the 888holdings offer look better, at least to one key person.
Jason Ader Quote
Ader, who owns SpringOwl Holdings, recently told Reuters, “If this was a 135p-140p price (from GVC) that might be enough for the Bwin shareholders to get comfortable with all the uncertainties. The 122p price is probably not enough, but it’s enough to get the Bwin boards attention.”
Big Impact on New Jersey Market
Whoever win the bidding war, the transaction should have a big impact on the New Jersey online gaming market. Bwin.Party is a partner with Borgata, which leads the online casino and online poker site numbers for the New Jersey gaming market. The company which ends up owning Bwin is going to be the leader in New Jersey iGaming.
If the winner ends up being 888 Holdings, the lead is likely to be insurmountable, because 888 Holdings also works in partnership with Caesars Interactive, the number two competitor in the NJ market. If so, then 888 Poker might be able to compete with PokerStars in the New Jersey online market, if PokerStars ever is approved. But even if GVC Holdings wins the Bwin-Party bid process, then GVC should be a major player in America’s number one legal market at the moment.