Internet betting firm 888 Holdings announced that it will be withdrawing its bid for rival betting firm Bwin.Party after the company said that they would prefer the higher bid put forth by GVC Holdings.
The announcement came in a statement from 888’s board, noting that the agreement that the company struck with Bwin on July 17th had been terminated.
The statement read: “The 888 board has concluded that, as a result of its own extensive due diligence on bwin.party, it cannot see sufficient value in bwin.party to warrant a revision to its offer. Consequently, 888 confirms that it is no longer in discussions regarding the acquisition of bwin.party.”
Bwin had previously favored 888’s original bid of £898 million, but GVC revised their previous bids multiple times before eventually settling on a price of £1.116 billion.
GVC’s CEO Kenneth Alexander issued a comment on his company’s successful bid, noting: “GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree. Sports betting is in our DNA and leveraging GVC’s experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long-term value for combined shareholders.”
Online Casino & Bingo Takeover
Gaming firm 888 Holdings has won the takeover battle to buy FoxyBingo owner Bwin.party in a cash and shares deal worth £898m.
Gibraltar-based 888 said the agreement is a “transformational opportunity” to boost the amount of games it offers and make cost savings.
The move comes as bid activity in the gaming sector hots up. GVC Holdings, a rival to 888 backed by Amaya Gaming, the company behind PokerStars, had also been vying for Bwin, and last week made a cash and shares offer that valued the business at £906m. Meanwhile, less than six months ago 888 rejected a takeover bid from bookmaker William Hill, which valued it at about £750m.
Brokers at Peel Hunt said Bwin’s acceptance of the lower 888 offer suggested greater confidence in 888’s share growth potential.
A combination of new taxes on online gambling around the world and the need to invest in marketing and technology is behind the consolidation in the industry. Shares in 888 jumped almost 8%, while Bwin’s stock was unchanged.
Management at 888 added that it expects the combination to lead to savings of at least $70m (£45m) a year by the end of the 2018 financial year. The deal is expected to be completed by the start of next year.
Bwin.party has some of the world’s biggest online gaming brands, including Partypoker, Partycasino and FoxyBingo.
It was created from the merger of Austria’s Bwin Interactive Entertainment and PartyGaming in March 2011. It has 2,300 staff in offices in Europe, India and the United States and generates annual revenues of €612m (£426.5m).
888 executive chairman Brian Mattingley said: “This is a transformational opportunity for 888 in the consolidating online gaming industry, which is expected to grow significantly over the coming years.”
As part of the agreement Bwin chief executive Norbert Teufelberger will not join the enlarged business, but will instead be retained as an occasional consultant.
Bwin’s chairman, Philip Yea, added: “Bringing our two groups together will generate substantial financial synergies for the benefit of both sets of shareholders and create a strong player with the breadth of product, brands and geographic coverage to grow faster than either business would be able to achieve standalone.”
Peel Hunt said 888 has one of the best management teams in the industry. It added: “Strategically the deal is compelling and the $70m of targeted synergies is no doubt a conservative number.”