888 Buys bwin.party for £898 Million

Gibraltar-headquartered online gambling operator 888 Holdings announced earlier today a £898-million deal for the purchase of rival gaming company bwin.party digital entertainment plc.

Earlier this year, 888 rejected a takeover bid by British operator William Hill. As for bwin.party, it was put up for sale in 2014. 888 offered to buy the struggling gaming company in May 2015. The operator, which is best known for its online poker platform, has emerged as the winning bidder against yet another British gaming company – GVC Holdings. The latter offered to buy bwin.party for the amount of £908 million. In addition, its bid was backed by Canadian gaming giant Amaya.

According to the latest information, 888’s market capitalization currently totals £572 million and bwin.party’s amounts to £848 million. Here it is important to note that the latter entity was created as a result from a 2011 merger between online poker company PartyGaming and sports betting one bwin. Since its establishment, bwin.party has been struggling to realize any cost savings as well as with the constantly declining poker markets around Europe.

Under the acquisition deal, 888 is to pay 39.45 pence in cash and 0.404 new 888 shares to bwin.party’s shareholders. Once the transaction is completed, the latter company’s shareholders would own a total of 48.9% of the enlarged entity. The new group is expected to have a strengthened position in online poker, casino and bingo games, as well as in sports betting. At present, 888 is the provider of the technology that powers bwin.party’s online casino offering.

888 said in a statement from earlier today that it would finance the purchase by means of $600-million loan credit facilities. The two companies expect that the merger would result in cost synergies totaling $70 million per year by the end of 2018.

Brian Mattingley, Executive Chairman of 888, said that they are pleased with the opportunity to work with their bwin.party colleagues. He commented on their latest acquisition as a “transformational opportunity” for his company. Mr. Mattingley also noted that he believes the new entity would benefit from the “improved product offering” as well as the revenue and cost synergies.

Philip Yea, Chairman of bwin.party, pointed out that the deal would generate considerable synergies for the shareholders of both his company and 888. Furthermore, the brands they offer and their coverage would grow much faster, following the merger.

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