GVC Holdings has dropped Amaya and found new creditors to increase its bid to $1.55 billion for rival bwin.party, even though the latter gambling company had already agreed to a $1.4 billion offer from 888 Holdings.
GVC’s offer values bwin at 122.5 pence per share, a substantial increase over the deal the company reached in principle with 888.
The GVC board confirmed the offer on Monday through a press release, saying the bid includes 25 pence per share in cash and the rest through the issuance of new ordinary shares in GVC stock. The battle for bwin.party will continue, as 888 is expected to increase its offer.
Previously bidding in conjunction with Amaya (the online poker powerhouse that owns both PokerStars and Full Tilt), GVC attracted new financial backers through a $443 million Cerberus Capital Management loan, a private equity firm based in New York City. Should bwin accept the offer, GVC said it would need to raise an additional $233 million “through an equity placing of new GVC shares for cash.”
While a $150 million raise would be enticing to most companies looking to maximize its sale price for both shareholders and employees, bwin bluffed on the latest developments, telling the Daily Telegraph that its board “has recommended an offer from 888 and we are working towards getting that done.”
However, bwin did respond to media speculation surrounding the new GVC offer through a press release on Monday, confirming it has “received a revised indicative proposal” valuing bwin at 122.5 pence per share and that further announcements will be forthcoming.
888 isn’t commenting on whether it will match or surpass GVC’s offer, but should it decide to simply sit back and let bwin’s board make the final decision, it stands to collect nearly $9 million if bwin opts out of its earlier agreement with the company to move ahead.
Bwin and advisor Deutsche Bank believed the GVC/Amaya bid was riskier because it would have split the company in two, giving the poker platform to Amaya and the other gaming assets to GVC. But with Amaya out of the picture, at least on the bidding paper, that risk is lessoned, though GVC could always sell the party poker brand to Amaya once acquired.
Regardless of GVC’s intentions, $150 million is certainly something the bwin board must contemplate.
“The proposed premium over the accepted offer by 888 is such that the bwin.party board will probably have no choice but to reconsider,” Davy Research analysts said.
The general consensus is that bwin.party would prefer an 888 buyout due to both corporations being located in Gibraltar, an attractive acquisition not only due to an easier transfer of assets, but also in how it relates to the future occupational possibilities for current bwin.party employees.
“We think that bwin.party’s shareholder base would still have a preference for 888 paper over GVC stock. But a premium of close to 17 percent is an entirely different matter,” Davy Research concludes. “A case of ‘your move’ 888.”
We’re calling time.