Online gaming consolidation moved apace yesterday as 888 sealed an £898m take-over bid for its larger rival, bwin.party digital, under the nose of a slightly higher bid from GVC, the AIM-listed owner of Sportingbet, and Amaya, the Canadian owner of PokerStars.
The deal came just a week after bwin.party appeared to have endorsed a 110p, or £906m, cash-and-share offer from GVC saying it wanted to “finalise” that offer “over the coming days”.
The offer from 888, also a mix of cash and shares, is worth 104p for each bwin.party share. It and GVC have been vying to win bwin.party since it put itself up for sale at the end of last year.
The gaming industry is rapidly consolidating, as many of the main players have found an urge to merge in a world where tightening regulation and increasing taxation put pressure on their costs of recruiting customers and investing in the latest technology.
The deal comes just months after 888 rejected a £700m takeover bid from William Hill and follows Sky’s sale of an 80 per cent stake in Skybet to the private equity firm CVC Capital in a deal valuing it at £800m.
Hill’s rival Ladbrokes is currently in talks to merge with the bookmaking operations of private equity-owned Gala Coral.
Although there are some overlaps, the two businesses fit well together. Bwin will bring 888, which is strongest in poker and casino games, a fast-growing sportsbook.
While 888 is particularly well-known in the UK, bwin.party’s largest market is Germany. The combined group will have licences in 14 jurisdictions and revenues of more than $1bn (£640m). That will give it extra firepower in the “grey markets” of eastern Europe where regulation is only just starting to be introduced.
“We are delighted that bwin is recommending our offer to its shareholders,” said Brian Mattingley, the chief executive of 888. “This is a transformational deal which creates one of the world’s leading online gaming companies. It will benefit from significantly enhanced scale, an improved product offering as well as significant cost and revenue synergies.”
888 said it had identified $70m (£45m) of potential cost savings.
Bwin shareholders are being offered 39.4p cash and 0.404 new 888 shares for each of their shares, valuing them at just over 104p.
They rose 1.1p to 104p yesterday while 888 shares jumped 13.75p, or 8 per cent, to 173.75p. Bwin shareholders will end up with 49 per cent of the merged group.
The deal was welcomed yesterday by the US activist investor Jason Ader, whose Spring Owl vehicle is bwin’s second biggest shareholder.
“I believe not only are 888 the best buyer for this company but that its management team will realise significant long-term synergy value for our shareholders with the least amount of execution and regulatory risk,” Mr Ader said.Reuse content