GVC Holdings Offers $1.4 Billion for Bwin.Party Digital Entertainment Buyout
GVC Holdings Plc has offered Bwin.Party Digital Entertainment Plc $1.4 billion in a buyout plan. The proposal from GVC Holdings could touch off a bidding war with 888 Holdings, a rival gaming company which made an undisclosed bid for Bwin.Party in May 2015. 888 Holdings, which owns 888casino, 888poker, and 888sports, declined to say whether it would make a counter proposal.
Nick Batram, a financial analyst for Peel Hunt, said that 888 Holdings could make a counter bid if it chose to do so. Batram said, “I don’t think 110 pence is a price that knocks 888 out of the process, if they really wanted it but equally they had ample time to match or better that bid.”
Consolidation of Gaming Industry
Whoever eventually takes over Bwin.Party, the consolidation of the gaming industry continues apace. Online gaming companies want to scale up their business models, so they are seeking rivals to give them that boost. Brick-and-mortar gaming companies want to bolster their services and leverage their brand names to a worldwide online audience.
UK gaming companies are especially motivated to increase their worldwide scope. Due to the Point-of-Consumption Tax, which imposed an additional 15% on UK-based gaming late last year, gambling companies which do a major percentage of their business in the UK are looking for a buffer from higher taxes and more regulations.
Kenneth Alexander Discusses Difficulties
Kenneth Alexander, the CEO of GVC Holdings, told Reuters in an interview that he expected his deal would offer benefits of at least $88.48 million. The GVC offer is 110 pence per share, which represents an 11% increase to Bwin’s closing price on Wednesday. News of the possible buyout drove Bwin’s share price up 2.6% on the London Stock Exchange. GVC Holdings’ share prices increased 0.5%.
Bwin merged with Party Gaming in 2011, creating what was the largest online gambling company in the world at the time. In 2014, Bwin.Party put itself up for sell. Since that time, speculation has swirled on which rival eventually would be the beneficiary.
Bwin and Party’s Brand
Bwin.Party’s most lucrative brand is PartyPoker, a top poker website. PartyCasino, World Poker, and Foxy Bingo are also key websites in the company’s network. The company has had trouble dealing with the new regulatory structure in the United Kingdom, though, so it would prefer to sell to a company with a more international outlook.
Kenneth Alexander spoke of those troubles when he said, “It’s been a very difficult market for Bwin but its also been a very difficult market for everyone. From the GVC perspective, one that excites me the most is Bwin’s sports betting brand and that’s the brand with enormous potential.”
GVC Holdings and Amaya Gaming
The GVC Holdings bid is being backed by Amaya Gaming, the Canadian online gaming software company which bought PokerStars for $4.9 billion last year. Amaya Gaming will take some of the assets from the purchase, though it is uncertain what those assets will be.
Bwin’s sports brand, which Mr. Alexander specifically discussed, would be a prime add for Amaya Gaming. PokerStars dominates the online poker market, but Amaya CEO David Baazov has said he would like to use the PokerStars brand in other niches, such as sports betting and daily fantasy sports.
