Isle of Man-based gambling company GVC Holdings PLC announced earlier today that it had reached an agreement to buy rival bwin.party digital entertainment plc for the amount of £1.12 billion ($1.7 billion). GVC is to pay for its newest acquisition in cash and shares.
Gibraltar-based bwin.party said on Friday that its shareholders had withdrawn their recommendation for the bid offered by rival gambling operator 888 Holdings and now support the GVC offer.
Earlier this year, bwin.party announced that it had received several proposals by major gaming companies. However, 888 and GVC proved to be the most persistent potential buyers. In July, bwin.party officials said that they had chosen a lower bid from 888 because they considered it a more certain one. 888 proposed to buy its rival for the amount of £898 million.
Although GVC’s market value is half of 888’s, the company did not gave up on its decision to eventually acquire bwin.party and has worked on preparing an attractive enough proposal over the past several months.
Philip Yea, Chairman of bwin.party, said earlier today that this is probably the end of the months-long deliberations over which one of the two bidders would be chosen as preferred buyer of the Gibraltar-located gambling operator, which recently sold one of its major brands – the World Poker Tour. Mr. Yea further pointed out that GVC has demonstrated strong determination and “has worked very hard to catch up” with the offer first proposed by 888.
Under the terms of the deal, bwin.party shareholders will hold a 66.6% stake in the new business entity, which is expected to annually generate no less than €125 million in cost savings by 2018. Norbert Teufelberger, Chief Executive Officer of bwin.party, will join the new company’s board as a Non-Executive Director.
Commenting on why they had chosen GVC, Mr. Yea said that the Isle of Man-based company won due to the offered consideration, “the level, timing and deliverability of the financial synergies to be generated”, and the growth strategy proposed for the enlarged gambling group in a constantly growing and highly competitive market.
GVC announced that the cash portion of the deal would be funded with a €400-million debt by Cerberus Capital Management. In addition, the gaming company is to raise £150 million by selling shares to GVC directors and institutional investors.
The Isle of Man gambling operator was advised by Houlihan Lokey through the acquisition deal. Deutsche Bank AG advised bwin.party.
