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LONDON (The Deal) -- Gaming group Bwin.party Digital Entertainment came a step closer to concluding a nine-month sale process on Thursday by announcing the start of talks with GVC Holdings about a stock-and cash offer worth about £906.5 million ($1.4 billion).

Isle of Man-based GVC is offering 110 pence per share, both companies said.

That is almost 11% more than Bwin.party Digital Entertainment's 99.1 pence closing price on Wednesday.

GVC, which is far smaller than Bwin.party Digital Entertainment, had in May named Amaya (AMYGF) (AYA) as its bid partner.

The Canadian company wasn't mentioned in the statements, though a GVC spokesman said that it remained involved.

He said the structure of the joint bid was still under discussion, and described the talks between GVC and Bwin.party Digital Entertainment as exclusive.

Gibraltar-based Bwin.party Digital Entertainment said: "The board has considered the GVC proposal, the potential benefits of which it believes can accrue to Bwin.party shareholders from a combination of the two companies and the commitment shown to resolving a number of transaction-related issues and has determined to work with GVC so that they can finalize their offer over the coming days."

The development appears to squeeze out of the picture 888 Holdings, also of Gibraltar, which was the only other confirmed suitor, though Bwin.party Digital Entertainment had since November reported that it had received various proposals about "business combinations." Financial advisers at Deutsche Bank have been running the sale process.

Bwin.party Digital Entertainment shares by mid-afternoon in London were up 2.5 pence, or 2.5%, at 101.60 pence.
GVC, which is led by Chief Executive Kenneth Alexander, was up 4 pence at 449 pence, giving the company a market value of about £275.1 million.

888 Holdings was up 2.25 pence at 159.5 pence. It is worth £567.3 million.


Bwin.party Digital Entertainment also on Thursday reported a "significant improvement" in its performance in the first half, despite higher taxes.

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The company remains "confident about the prospects for the second half and the outlook for our business" and has made progress on non-core disposals, which included the June sale of its World Poker Tour events division to Hong Kong-listed Ourgame International Holdings for $35 million, said Chief Executive Norbert Teufelberger.

The interest in Bwin.party Digital Entertainment, itself the product of a 2011 merger, underlines an acceleration of deal-making activity in the gaming sector, driven in part by higher taxes.

Ladbrokes, which has traditionally focused on betting shops rather than online gambling, last month disclosed talks about a reverse takeover by the Coral Group betting unit of private-equity-backed Gala Coral Group. Coral Group includes U.K. betting shop arm Coral Retail, Italian betting shop operation Eurobet Retail and an online business.

The combination would have a market value of well over £3 billion.

888 Holdings itself was the target of a short-lived bid proposal in February from U.K. gaming market leader William Hill, whose £708.9 million offer failed to win over the Shaked family of Israel, which owns 49% of 888 Holdings.

GVC in 2013 teamed up with William Hill in a carve-up bid for Sportingbet.

In December, CVC Capital Partners agreed to buy 80% of the Sky Betting & Gaming unit of the United Kingdom's Sky, the pay-TV giant 39% owned by Twenty-First Century Fox (FOX) - Get Fox Corporation Class B Report, in a deal that valued the online operation at £800 million. The buyout firm struck the deal after making an unsuccessful bid in 2013 for Betfair.

CVC Capital Partners used to own William Hill.

GVC's financial adviser is a Cenkos Securities team including Mark Connelly, Callum Davidson and Stephen Keys. Its law firm is Addleshaw Goddard.


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