GVC Holdings Agrees to Buy bwin.party for £1.1 Billion
After a week of quotes and speculation, GVC Holdings and bwin.party announced on Friday that they have agreed to a deal in which GVC will purchase bwin.party for approximately £1.116 billion (USD $1,697 billion).
Bwin.party has been coveted by GVC and rival 888 Holdings for quite some time, and the two suitors have been battling for a couple months in their efforts to acquire the parent company of partypoker. The bidding war started in early July when GVC Holdings, owner of Sportingbet, announced it had proposed a 110p per share purchase price for bwin.party. 888 followed that up on July 17th with a bid of its own. Though the proposal of 104.09p per share was lower than GVC’s, the bwin.party Board actually ended up recommending it to its shareholders, citing corporate synergies and cost savings.
Another possible detractor to GVC’s offer was that it had to partner with Amaya Gaming to be able to finance the deal. Not only did this inject an element of financial uncertainty into the mix, but it also may have made the bwin.party Board fear that the company would be broken up once the acquisition was completed. It is thought that GVC would have taken control of bwin.party’s sports betting and casino gaming businesses, while Amaya, which already owns PokerStars and Full Tilt, would grab partypoker.
On July 27th, GVC announced that it had increased its bid for bwin.party, offering 25p per share plus shares of GVC stock, a combination that would total 122.5p per share. From then until the past week, the two parties were discussing details and issues related to the bid, though bwin.party had not veered from its recommendation of 888’s offer. One significant change to the deal was that Amaya was removed and instead GVC obtained a loan from Cerberus Capital Management to finance the purchase.
Things then got interesting this week leading up to Friday’s announcement. On Tuesday, bwin.party confirmed that it had received a new bid from 888 Holdings, though it did not say for how much. UK newspaper The Times reported that a source close to the deal said the offer was for 115p per share. The Independent also reported that on Saturday, bwin.party had told 888 that it was going with GVC’s proposal, which very well may have prompted the last-ditch effort by 888.
On Wednesday, perhaps fearing that bwin.party would stick with 888 because of the new offer, GVC Chairman Lee Feldman told The Times that his company was “not prepared to walk away” and would even consider the nuclear option of a hostile takeover bid if it came to that.
“We don’t see (going hostile) as necessary right now as we’re offering a higher price and have a better operating track record. That said, we believe GVC should own this asset and we wouldn’t exclude any strategy,” he said.
Now, of course, it looks like that won’t have to happen as both bwin.party and GVC have announced the agreement that will have GVC buy bwin.party for 129.643p per share. That price is comprised of 25p per share in cash plus .231 shares of GVC Holdings for each share of bwin.party. Based on the September 3rd closing price of GVC of 453p per share, the stock portion of the acquisition price comes to 104.643p.
While he paid lip service to other factors, it does sound like bwin.party Chairman Philip Yea was very much swayed by the higher price, saying of the decision to go with GVC:
In recommending the Offer from GVC, the Board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group’s growth strategy in an increasingly competitive marketplace. As a result of these and other factors, including the proven track record of GVC’s management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the Board has withdrawn its recommendation for the 888 offer and is now advising bwin.party shareholders to vote in favour of the Offer from GVC.
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