GVC beats 888; bwin.party directors agree to 1.16 billion-pound merger deal

4 September 2015

The bidding war to merge with bwin.party Digital Entertainment is finally over, as the company accepted a £1.16 billion ($1.7 billion) bid from GVC Holdings. bwin.party shareholders will own 66.6% of the new company, and current bwin.party CEO Norbert Teufelberger will serve as the new company's director.

The move comes as a surprise for those following the bwin.party rumors this summer. The expectation was for the company to reach a deal with 888 Holdings, which submitted a $1.4 billion bid for bwin.party in July. Then in August, GVC made a bid for bwin.party, but conventional wisdom dictated that 888 remained the favorite to win the battle.

Unlike 888, a publicly traded company that only operates in regulated markets, GVC is a relatively small firm that focuses on "gray" jurisdictions. The general consensus over the summer was that bwin.party – which, like 888, also operates entirely in regulated markets – would be unwilling to swap shares with GVC and take on additional risk.

"(A deal between) 888 and bwin.party makes the most sense because they are both listed companies on the London Stock Exchange, and because of that, they are turning off trading in gray jurisdictions," Global Betting and Gaming Consultants CEO Warwick Bartlett said in an August interview.

But GVC simply outbid 888. Its final offer valued bwin.party at 129.64 pence per share, a 12.5% premium on the firm's closing price on Sept. 3. Each bwin.party investor will receive 25 pence in cash per share, as well as 23.1% per share of GVC stock.

"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," bwin.party Chairman Philip Yea said in a joint statement by both firms.

The deal is the latest in a string of mergers that have taken place in the online gambling industry over the past year. In June 2014, Amaya Gaming purchased online poker giant PokerStars and sister site Full Tilt for a whopping $4.9 billion. In July 2015, Ladbrokes and Gala Coral merged to create the largest brick-and-mortar betting shop business in the U.K. And last week, Betfair and Paddy Power agreed on a £5 billion merger deal that will make the new firm the second-largest iGaming company in the world, behind only bet365.

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