Battle for Bwin Continues as GVC Returns with a New Partner and Higher Bid

888 HoldingsDespite Bwin’s previous announcement of naming 888 Holdings as the preferred buyer, GVC Holdings, the less favored bidder returned last Monday with a higher offer and a new financial partner.

GVC is topping 888 Holdings £898 million cash and shares of stock takeover-offer, by proffering almost £1 billion, also in cash and shares. To clear away complexities posed by the involvement of the Amaya Group as acquisition partner to the deal, GVC has taken on Cerberus Capital Management as new financial backer. Accordingly, the latter has committed to extend a £281 million (EU 400 million) senior debt financing deal as combination to the GVC shares.

GVC’s new offer equates to a takeover bid price pegged at 122.5 pence (£1.23) per Bwin share, comprising cash settlement calculated at 25 pence per share and the difference covered by the issuance of new GVC shares of stock. Compared to 888Holdings’s bid price of 104.09 pence (£1.04) per share, comprising 39.45p in cash and 0.4 of 888 shares, the new GVC offer is higher by 18.41 pence per share.

GVC Holdings asserts that a Bwin-GVC conglomeration would result to cost savings of more than £95 million (€135 million) per annum by year 2017. The assertion tops 888 Holding’s selling point that a Bwin-888 merger will lead to cost savings of £45 million annually beginning year-end of 2018.

Reports have it that GVC’s persistence has the encouragement of some Bwin shareholders who are said to be discontented with 888 Holdings offer. However, Jason Ader, the owner of one of the largest Bwin shareholder Springowl,  considers GVC’s new offer as still not enough. He added that even if 888 will not raise its present bid to counter GVC’s new offer, he will still support the 888 offer as a better choice.

Mr. Ader commented further that if GVC’s new bid is between 135 pence and 140 pence, then that could make Bwin’s shareholders feel more comfortable in going ahead with the uncertainties presented by a GVC-Bwin consolidation. As it is, Mr. Ader consider the new 122.5 pence per share tender as not enough. Still, he acknowledges that the new offer could get the attention of the Bwin Board.

According to Mr. Ader, it is incumbent on the Bwin Board to push GVC in putting forward a higher offer and to encourage 888 Holdings to reconsider theirs.

Last Monday, GVC Chief Executive Officer Kenny Alexander told the Financial Times (FT) that Bwin and a number of its shareholders are keen on GVC’s return with a new offer. Of particular interest is GVC’s plan to raise £150 million by way of an equity financing deal that could fund the restructuring costs needed to refinance Bwin’s existing debts.

Cerberus Capital Management, a US-based private equity group tapped by GVC Holdings to provide the debt-financing loan, is part of the group of private equity institutions that own Gala Coral, the most recent UK gambling company to go into acquisition talks with rival British betting company Ladbrokes.

As of this writing, 888 Holdings is yet to come out with a comment about the new development in the continuing Bwin acquisition saga.


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Mark Whysall