The online gaming industry has been growing at an astounding rate since its invention in the 90’s. As such, it has always been a trending topic in the news with business deals, software development, global legal tussles, and, of course, huge jackpot winners.
While new companies are coming up every day to get a share of the lucrative online gambling market, established companies are fighting to expand their empires by acquiring stakes from their competitors.
Just recently, three world leading online gaming companies were involved in a takeover battle dubbed Online Gambling Billion Dollar Bidding War by a news outlet.
This article explores the circumstances surrounding the bidding tussle.
Bwin.Party Digital Entertainment
This online gaming company was established out of the merger of Bwin Interactive Entertainment AG and PartyGaming Plc.
Headquartered in Gibraltar and listed and Listed on the London Stock Exchange, the firm owns some of the globally popular online gaming brands including PartyPoker, Foxy Bingo, party casino and bwin.
Also headquartered in Gibraltar, 888 Holdings Plc. is an online gaming company that runs several cutting-edge gambling platforms such as Pacific Poker, Casino-on-Net, 888sport and 888ladies bingo.
It was founded in 1997 by Israeli entrepreneurs Shay and Ron Ben-Yitzhak and Avi and Aaron Shaked as Virtual Holdings Limited.
GVC Holdings Plc
A multinational gaming and sports betting group, GVC Holdings holds a gaming licence from the Lotteries & Gaming Authority of Malta.
Established in 2004 and listed on AIM, the company’s notable brands include Betaland, CasinoClub and Betboo.
It is headquartered at the Isle of Man with offices in Uruguay, Malta, Israel, Ireland, The Philippines and the UK.
The Billion Dollar Bidding War
The gambling industry has, in the recent years, witnessed some of both sensible and unanticipated mergers. In the year 2013, GVC combined forces with William Hill to acquire Sportingbet Plc, and last year, Amay took over PokerStars for about €4.45 billion.
In the past months, the industry was treated to yet another takeover battle with Bwin.Party Digital Entertainment at the centre of $1.7 billion buyout tussle as it rivals – GVC Holdings Plc and 888 Holdings – circled with competing bids.
Bwin posted revenue of € 611.9 million, in 2014 and employs over 2,300 people in Europe, the United States and India.
The same year, Bwin embarked on a journey to explore consolidation opportunities in the gaming industry. This would generate significant synergies for the advantage of the stakeholders involved and build a strong contender with the breadth of brands and geographic coverage for faster growth than either business could achieve if they were operating stand-alone
GVC Holdings Plc, in partnership with Canada’s Amaya Inc, made a €1.5 billion offer, comprising of cash and GVC stakes in a bid to take over Bwin.party.
GVC’s offer set the stage for a bidding battle with 888 Holdings Plc, which had earlier offered to buyout Bwin for an undisclosed amount of cash and shares.
Consolidation in the gaming has been an expectation with the rise in taxes and stringent regulations in Britain and other leading gambling markets continuing to hurt companies.
Shares in Bwin.Party – which put itself up for sale in 2014 – have been consistently rising to being the second-highest gainer on the FTSE Midcap gainers list.
GVC, just like 888 Holdings, is LSE listed. It has a market value of close to $440 million while 888’s is about $947 million, and Amaya of roughly $3.6 billion.
Combining faces with Amaya presented GVC with a competitive advantage to take on bigger competitor 888, which offers poker, bingo and casino games and was also hunting for acquisitions.
This deal was likened to the 2013 Sportingbet’s takeover jointly by GVC and William Hill. The British bookmaker took control of Sportingbet’s Australian and Spanish operations, leaving GVE Holdings with the rest of the business.
Regarding the bidding war, one financial analyst observed,”Amaya might come and be prepared to write a much bigger cheque, even though I think the synergy benefits would be bigger for 888,”
Whereas stakes in the Isle of Man headquartered, GVC had marginally risen to 461.2 pence, those at 888 Holdings had fallen by 3.5% to 163.75 pence.
Gibraltar-based 888, which concluded talks on a buyout by William Hill Plc earlier in the year, said that stakeholders with close to 59% stake supported its offer. This indicated backing from the family trusts linked to the company’s Israeli founders.
After much deliberation on the two rival companies’ proposals, Bwin.Party Digital Entertainment’s decided to accept GVC Holding’s offer and settled on a takeover deal that could be sealed already by the end of the year 2015.
According to a joint statement released on 4th September 2015,”the boards of GVC and bwin.party are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which GVC will acquire the entire issued and to be issued ordinary share capital of bwin.party.”