The battle for bwin.party
GVC and 888 have made their move in a bid to gain control of bwin.party, while Amaya are also rumoured to have entered the fray, but which deal makes the most sense?
It’s been more than six months since bwin.party first opened itself up to offers from interested parties but it’s only been in the past few days that the bidding process has really started to heat up with a number of offers now on the table.
GVC Holdings was first to show its hand when on Friday it confirmed media reports it had lodged a non-cash reverse takeover deal which would see bwin.party shareholders take a stake in the enlarged company.
This statement of intent was quickly followed by news that 888 had submitted a part-cash and part-paper deal in a move which has already gained the backing of 59% of its shareholders, including the Shaked family, who had recently rejected a proposed takeover offer from William Hill.
And this morning it emerged that GVC may now team up with PokerStars’ owner Amaya Gaming to put together a deal similar to 888’s, part-cash, part paper, which eGR understands was something both parties had discussed several weeks back, although this has yet to be confirmed by either party.
Sizing up the bids
With news of the bids and bidders now out in the open there is a chance more players could enter the race and for additional offers to be lodged, but bwin.party directors will be focused on the three proposals it has received thus far.
GVC, which has long been linked to bwin.party, is an obvious match in terms of its ability to maximise the revenue from bwin.party’s substantial grey market casino and sportsbook business and its desire to improve its base of regulated revenues. However, while GVC would unlikely have much use for the bwin sportsbook platform, the poker businesses or bwin.party’s US-facing operations.
It must also be noted that GVC are course and distance winners, having successfully turned around its acquired share of the Sportingbet business in rapid time. Chief executive Kenneth Alexander (pictured) will no doubt be pointing to the rejuvenation of Sportingbet under his guidance as proof that bwin.party shareholders can trust him to do similar this time around.
Synergising
It could be argued that 888 is best placed to extract more synergies from a potential bwin.party tie-up. 888 has enjoyed rapid growth through its Kambi-powered sportsbook but the vertical remains the one product for which it doesn’t own the technology and the firm recently spoke of its wish to acquire its own sports betting platform.
888 will also be in the position to use bwin.party’s US-facing business for its own stateside gain and leverage the PartyPoker traffic to up-scale its own poker liquidity. And while GVC would likely entertain offers of bwin.party’s bingo business, 888 is the prime technology provider for Cashcade and therefore would have no trouble in integrating sites such as the popular Foxy Bingo.
One area very much up for debate is that of Germany. The country’s regulatory situation is currently as clear as mud and there is a real danger authorities could take a heavy-handed approach and call time on online gaming in the country, particularly if attempts to overturn the recently applied VAT to online gaming is successful in the courts.
The question would then be who is be best placed to stomach such revenue loss, with bwin.party operating a large German-facing gaming business and both GVC and 888 also present in the country. Some would argue that 888’s greater size would give it greater flexibility although GVC’s risk appetite may mean the revenues wouldn’t necessarily disappear completely.
Strength in numbers
Of the official two bids, it would appear that 888 is in the strongest position. And this view has perhaps been given greater weight by news that GVC has since, reportedly, teamed-up with Amaya to launch a joint-bid for bwin.party.
eGaming Review understands this combination is no knee-jerk reaction, with the two parties having previously discussed a joint-ticket bid when they were the final two bidders under the process led by Deutsche Bank. However, market rules dictate the final two bidders cannot form a joint-bid so the deal was scuppered but the recent re-entry of 888 has now altered the picture.
According to reports, the deal would see Amaya assume control of bwin.party’s poker business with the remainder controlled via a special purpose vehicle jointly-owned by Amaya and GVC, but with the latter holding a controlling stake.
It is understood that GVC would issue additional shares to fund the deal, an offer which would again need to be weighed-up by bwin.party against shares in 888, while the assets held by the special vehicle, which also include payments company Kalixa, would be distributed between Amaya and GVC, or sold-off to a third-party.
A deal involving both Amaya and GVC would seem to have some clear synergies and remove some of the apparent redundancies in a straight GVC deal.
It could ultimately raise the most value with the potential for bwin.party’s assets to split up between the two acquiring parties in a number of combinations, but at the moment it’s far from clear exactly how a deal would be structured.
With plenty of detail now in the public domain, people close to the talks expect the process to conclude in a matter of weeks, but at first glance it appears this new combination might be playing the strongest hand of all.