888 Holdings’ bwin.party Takeover in Doubt

August 18th, 2015 | by Kaycee James

888 Holdings' takeover of bwin.party on hold.

888 Holdings’ takeover of bwin.party put on hold after banks freeze $650 million loan. (Image: new.edu)

The expected merger between bwin.party and 888 Holdings could be in jeopardy according to recent reports.

Following what seemed like a successful $1.4 billion (£900 million) takeover bid by 888 back in July, the iGaming operator has now run into problems with two of its main creditors: Barclays and JP Morgan.

Despite initially supporting the deal, the two banks have put a temporary stop to things following an air of uncertainty surrounding bwin.party’s immediate expectations.

Banks Holding Out for the River

Concerned that bwin.party is still discussing bids with GVC, Barclays and JP Morgan want firm assurances that an uninterrupted deal will happen before it releases an agreed $650 million covenant-lite leveraged loan.

News of the hold came via Reuters late last week and the situation was further confirmed to the iGaming industry by Barclays.

Issuing a statement to Pokernews, the banking institution explained that the current climate of uncertainty isn’t good for business and it wants clarification that bwin.party is going to formally accept 888 Holdings’ bid and reject GVC’s $1.5 billion (£1 billion) offer.

“The last two offers from GVC and the way the company decided to drop Amaya Gaming to advance in the negotiations have been a real game changer in the acquisition process. Today, the situation is no longer as clear as it was on July 17,” read a statement.

Although the holding of a potential dual-currency loan will be a small cause for concern at 888 Holdings HQ, the dynamic will, ultimately, save the company some money.

Under the terms of a merger and acquisition (M&A) deal, 888 Holdings was due to pay a ticking fee (compensation owed when a deal stalls) of 50 percent of the interest margin between 16 and 45 days of agreeing to a loan.

888 Holdings Still Confident of a Deal

However, despite the banks putting a hold on the $650 million loan, 888’s board is still confident that the merger and acquisition will go ahead.

“As announced on 17th July, the financing of 888’s recommended offer for bwin.party digital entertainment plc is secured by firm commitments from Barclays Bank and JP Morgan,” explained a spokesman for 888 Holdings.

This confidence appears to be backed up by bwin.party’s initial acceptance of 888 Holdings’ offer.

Despite being $156 million (£100 million) lower than GVC’s bid, the future terms of 888’s proposal have been described as more favorable for bwin.party and that’s something the operator is keen to take advantage of.

As it stands, it looks as though all bets are off at the moment; however, it’s expected that a resolution will be made within the coming days.

Regardless of which way the outcome goes, it’s a certainty that bwin.party will soon have a new owner, but who that will be continues to be unclear.