The tug-of-war over internet gambling firm bwin.party continues as GVC Holdings refuses to let go of the rope just yet. GVC confirmed Monday that it has made another proposal to buy bwin.party, sweetening its previous offer and ditching its former partner.
Bwin.party, the parent company of partypoker, has been on the block for at least a couple of years, but until this month, nobody had stepped forward with a tempting enough offer. That has all changed very quickly. On July 9th, GVC, in partnership with Amaya Gaming, offered to purchase bwin.party for 110p per share. It looked like that was going to be the winning bid, but on July 17th, 888 Holdings, which had previously pursued bwin.party, offered 104.09 per share. Though that offer was lower than GVC’s, bwin.party recommended that its shareholders accept it.
It appears the problem with the GVC/Amaya bid was that it was just going to be too much of a hassle. Reports were that GVC and Amaya were going to chop bwin.party up, with Amaya getting partypoker and GVC, which already owns Sportingbet, getting the sportsbook and casino games operations. Bwin.party decision makers may not have liked that the company would be torn apart; they may also not have wanted any potential industry backlash, as it would have put Amaya Gaming into an even more powerful position in the industry. It already owns PokerStars and Full Tilt Poker – it would have owned one of the other top brands, as well.
Last week, word came out that GVC would possibly try one more time to woo bwin.party, this time without Amaya Gaming. And that is what has happened. The new proposal is a significant overshoot of its earlier offer, amounting to 122.5p per share. 25p of that will be in cash and the remainder would be in new GVC stock.
With 824.1 million shares of bwin.party outstanding, the new GVC proposal amounts to just over a £1 billion ($1.57 billion) deal.
Without Amaya Gaming involved in the deal to provide a chunk of cash, GVC will have to come up with another way to pay for bwin.party. In a press release, GVC Holdings said that it will use “a €400m senior secured loan provided by affiliates of Cerberus Capital Management” as well as raise another £150 million through a new equity placing of GVC shares.
Kenny Alexander, CEO of GVC Holdings, told The Financial Times, “We have been talking with Cerberus for quite some time. They have been involved for months.”
He also said that his company did not expect bwin.party to go with 888, saying, “I was very surprised when they made that decision. 888 were there and we were not quite there, but we were progressing well. We would have got there but they took the decision they took.”
In the aforementioned press released, GVC said that, after taking on bwin.party, it estimates it would achieve more than €135 million in cost reductions by the end of 2017.
Now we wait and see if bwin.party accepts this offer, if it sticks with 888, or if 888 comes back with yet another offer.
