GVC launches USD 1.6B bid for bwin.party

GVC’s proposal is an attempt to scupper an agreed offer for bwin.party from competitor 888 Holdings Plc. The cash-and-share bid values each bwin.party share at 122.5 pence, GVC said in a statement Monday, topping the 110.15 pence that 888’s bid was worth at the close of trading on Friday.

The proposal shows that GVC isn’t willing to concede the contest after 888 won over Bwin.party’s board with a lower offer. The increased bid may cause bwin.party to think again, after the Gibraltar-based company said 888’s offer provides a higher degree of certainty.

“This is a real statement of intent from GVC. The proposed premium over the accepted offer by 888 is such that the Bwin.party board will probably have no choice but to reconsider its acceptance of the 888 offer,” David Jennings, an analyst at Davy Research, said in a note.

Bwin.party shares rose as much as 3.1 percent to 112 pence in early London trading, exceeding the value of 888’s offer for the first time. 888 fell 1.3 percent to 172.75 pence, while GVC declined 0.5 percent to 426.5 pence.

After its initial 110 pence a share proposal was trumped by 888, GVC was encouraged to stay in the contest by some of Bwin.party’s larger shareholders, a GVC spokesman said. Its revised offer consists of 25 pence in cash and the rest in stock.

Industry Consolidation

GVC has already played its part in the consolidation of the online gaming industry after teaming up with William Hill Plc in 2013 to take over Sportingbet Plc. Acquisitions are being driven both by the growth of the sector and increased regulation as governments raise taxes and seek to reduce crime.

The consolidation isn’t restricted just to online gaming providers. Betting-shop leaders Ladbrokes Plc and Coral Group agreed to merge on Friday as they seek to fight back against the tide of Web-based competition.

GVC said it expects to be able to generate cost savings of 135 million euros (USD 150M) per annum by 2017 should it succeed in acquiring Bwin.party.

The Isle of Man-based company would finance the bid with new shares and a 400 million-euro senior secured loan from Cerberus Capital Management LP. It also plans to raise about 150 million pounds by selling new GVC shares to fund restructuring costs and the refinancing of existing Bwin.party debt.