A five-month bidding war to secure the latest consolidation in the gambling sector finally appears likely to yield a buyout after the owners of online gaming firm Bwin.party switched their previous recommendation to back a £1.1bn offer from GVC, which owns rival Sportingbet.
Bwin had initially advised shareholders to accept a 105p a share proposal from a larger competitor, 888, but after engineering a competitive process between the two it was eventually unable to turn down a more lucrative bid which the Financial Times says was worth around 130p a share. Even a late all-in from 888, which came in at around 115p a share, was insufficient to secure the deal.
Despite the price difference, the board said it had been "balancing some very fine points at the margin" and that a discrete poll of shareholders had resulted in an "even split". Concerns over the structure of the takeover by GVC, which is smaller than Bwin, and its ambitious cost savings, were overcome when two shareholders controlling a combined 9 per cent interest, Henderson Global Investors and the investment arm of former Austrian vice-chancellor Hannes Androsch, said they were happy to support the higher offer.
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Structured as a reverse takeover – in which the buyer funds the issue by the target company of shares, which are used to purchase the smaller suitor – at completion Bwin shareholders will control two-thirds of the company. The takeover has been financed in part by a €400m (£293m) loan from the US private equity firm Cerberus and a £150m capital call.The firms have confirmed there will be at least €125m (£91m) of cost savings annually by the end of 2017, which Bwin chairman Philip Yea said would include staff cuts.
Bwin bidders go all-in for £1bn takeover battle
01 September
A long-running battle to buy listed online gaming firm bwin.party is coming to a close, as two rival bidders have gone heads up with final, best-offer bids that will be considered in the coming days.
Bwin, itself formed through a merger in 2011, has been on the block since last November, according to the Financial Times. Its sale looked to have been sealed in mid-July when the board unanimously recommended a 105p-a-share offer from 888 that valued the business at close to £900m, but management instead successfully triggered a bidding war with rival Sportingbet's owner GVC.
Talks persisted for weeks to resolve "significant concerns" – not least that as a smaller company the transaction would need to be executed via a 'reverse takeover', which involves buying and swapping shares and prevents new funds being raised to finance a deal. Eventually though, GVC came to the table with an offer of more than £1bn. It says it has secured a €400m loan from Cerberus, the private equity firm.
The Independent says the board was prepared to scrap its previous guidance and recommend the revised approach today. But now 888 has come back with its own improved bid, which has not been disclosed but the Daily Telegraph claims is worth around 115p a share.
Bwin has said it will consider its options over the coming days. GVC's offer, worth around 131p a share, is more lucrative in the short term and does not come with conditions imposed by 888 including a hefty one per cent break fee, but even if it can be financed there remains uncertainty that the smaller buyer could maintain a main market listing, secure a gaming licence in New Jersey and achieve hefty cost savings. GVC has also told the Independent it may break up the business if it received an approach that it believes represents value for shareholders.
This is the latest deal in a sector that is consolidating rapidly, after first Ladbrokes and Gala Coral and then Paddy Power and Betfair agreed merger terms. William Hill had earlier this year been in talks to acquire 888, but discussions ended because the bookmaker was unwilling to meet the asking price.
