Bwin.party’s days as an independent concern continue to shrink in number following today’s report by the UK’s Financial Times of a specific offer to purchase the company by GVC Holdings PLC. According to unnamed sources connected with the negotiations, GVC has made a firm offer of “just over £900m” (or roughly US $1.4 billion) for the ailing bwin.party operations.
GVC is both a business-to-business (B2B) and business-to-customer (B2C) software concern, with SportingBet being its most well-known brand. GVC is significantly smaller that bwin.party, but has enlisted an investment partner in Canada’s Amaya Gaming, the parent company of both PokerStars and Full Tilt Gaming.
Of course, while bwin.party is almost certain to be sold by the end of 2015, it may not be the GVC/Amaya partnership that turns out to be the buyer. 888 Holdings has also been in the running for bwin.party’s lagging operations, and the interests of both GVC/Amaya and 888 have been publicly acknowledged since at least the middle of May.
The GVC/Amaya bid may have been tweaked a bit over the past six weeks. Back then the deal was termed a “reverse takeover” and valued at about US $1.5 billion. As for 888’s separate offer, a separate FT report from mid-May pegged it as a part-cash, part-share-swap deal worth about €750 million (about US $825 million). It is quite likely that since May, 888 has upped its offer or restructured it in a way to make it more competitive against the GVC/Amaya bid.
One of the reasons 888 Holdings may have come back to sweeten its own offer is that if the company could successfully win the bidding for bwin.party, it will be less attractive itself toward other hostile takeover efforts. Both Ladbrokes and William Hill have eyed 888 as a separate acquisition target, and William Hill tried but failed earlier this year to soak up 888 in another billion-dollar takeover attempt.
It’s been a busy year behind the scenes, by all accounts, whether or not any deal has been finalized. The maturing European gambling market continues to be ripe for a shakeup, with the moribund and money-hemorrhaging bwin.party at the center of the coming storm. Since bWin and the old PartyGaming joined forces in 2011, the company has bled hundreds of millions of dollars in operational losses, and has seen its market share decline across most segments, particularly in online poker.
One of the two former co-CEOs of bwin.party, James Ryan, has long fled for the fledging US market, while the remaining holdover as CEO, Norbert Teufelberger, has been unable to right the bwin.party ship. The company has also had to fend off an organized shareholder revolt, and has undertaken several rounds of cost-cutting and selling non-critical assets, such as its dumping of the World Poker Tour to a Chinese gaming company a couple of weeks back.
The two current offers for bwin.party might not be the only ones out there, though two seems to be enough. Bwin.party’s share price has stabilized in the weeks following the company’s London Stock Exchange disclosure back in May that the company was in negotiations with other firms. The $1.4 billion deal (as now valued in today’s Financial Times update) represents roughly a 10% premium over bwin.party’s current actualized stock value.
One of the most curious elements in the pending sale of bwin.party is the company’s toehold in the fledgling United States online-gambling market. Bwin.party is already well established as the software partner of Atlantic City’s Borgata Hotel & Casino, one of the major players in the New Jersey market. 888 and Amaya are also licensed in New Jersey, though 888’s largest US presence these days is actually through a state-run partnership in neighboring Delaware.
Though bwin.party has likely not yet profited dollar one from its recent US investments, the GVC/Amaya partnership might value the existing bwin.party deal with Borgata higher than so valued by 888, just because such an acquisition could finally force the door fully open in New Jersey for the return of PokerStars-branded software. Stars will likely get the go-ahead in New Jersey sooner or later, anyway, but first Stars and now new parent Amaya have been stymied in New Jersey, as pawns in a larger American political game.
It all makes the pending bwin.party sale very interesting, on both sides of the pond. The bwin.party brands, including the venerable PartyPoker, will certainly live on. But how the industry restructures itself around the company’s sale and reorganization remains to be seen.
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