GVC Buys Bwin.party for $1.7 Billion

Gibraltar-based Bwin.party Digital Entertainment has been bought over by GVC Holdings after a take-over battle between 888 lasting several months.

The online gaming company had looked set to accept the original $1.36bn offer from 888, but Bwin.party’s Chairman, Philip Yea, said that “GVC have been very determined. They have worked very hard to catch up”.

The news saw 888 shares drop by around 9% following the announcement that their bid had been rejected, over-turning an original recommendation supported by Bwin.party’s directors. Although 888 did not respond immediately to the news, GVC’s CEO Kenny Alexander said that ‘the contest is over’ as far as he is concerned.

The $1.7bn GVC buy-out will see their shareholders owning 33.3% of Bwin.party, with a share offer up almost 45% since the contest began back in May – and some 25% higher than 888’s bid.

The growth of the online gambling industry, alongside increased regulation and taxation, were the main drivers behind GVC’s ‘consolidation’ move on Bwin, and “the relatively more straightforward operational integration” of the GVC-Bwin combination was also a significant factor in Bwin’s decision, according to Chairman Yea.

GVC’s bid was in the form of a cash-and-shares proposal which included cost savings totaling close to double that of 888’s offer, and funding of the take-over will see $4.5m of debt provided by Cerberus backed up by a significant sale of shares to institutional investors and GVC’s director.

It is not clear what the merger will mean for the 3100-strong workforce across the 2 companies, though ‘disposals’ have not been ruled out. The CEO of Bwin.party – Norbert Teufelberger –will, however, join the board of the new company in a non-executive role.