Inside Gaming: PartyGaming and bwin Announce Merger, LV Sands Fires China CEO, and Station Casinos Settles
The online gaming industry is buzzing this week with news of the $1.76 billion merger between Euro giants PartyGaming and bwin. The brick-and-mortar industry is all atwitter about a major shakeup in the leadership of Sands China. CEO Steven Jacobs was fired and replaced by Wing Chao, conveniently in the same week the Sands announced improved second-quarter numbers on the strength of its Asian operations, directed by the just-fired Jacobs. And in other news, the Stations Casino legal saga may be close to an end now that the company has announced a settlement with some angry creditors holding $2.8 billion in unsecured debt.
PartyGaming and bwin Merger Shakes Up Online Gaming World
The talk of the industry this week is the massive merger between PartyGaming PLC and bwin Interactive Entertainment AG. If approved by the companies' shareholders, the combined entity will be the world's largest publicly traded online gaming company. The deal, valued at $1.76 billion, brings together two already substantial publicly traded companies. PartyGaming's shareholders will get 48.4 percent of the new company, with 51.6 percent going to bwin's shareholders.
First, however, 75 percent of the shareholders must agree to the merger during a shareholders meeting in the first quarter of 2011. Once they grant approval, PartyGaming will acquire all of bwin's assets, and they will form a joint venture incorporated in Gibralter. This means bwin will be delisted from the Vienna Stock Exchange, and the new company will trade on the London Exchange, home to PartyGaming. The merged company will be co-directed by bwin CEO Norbert Teufelberger and PartyGaming CEO Jim Ryan.
"This business combination makes great strategic, operational and financial sense. We will be in pole position to capitalise on the wealth of opportunities that will flow from the continued evolution and expansion of the global online gaming industry," Teufelberger said.
Both companies' shares rose significantly in the hours following the announcement.
Sands China CEO Fired While Company Announces Strong Returns
It's been a busy week for the Las Vegas Sands Corp. Last Friday, Sands China CEO Steven Jacobs was fired and the search for his replacement was launched. On Wednesday they announced second quarter earnings, and on Thursday, they hired Wing Chao as the new CEO.
No reason was given for Jacobs' dismissal, but hostility between Jacobs and Sands Chairman and CEO Sheldon Adelson has been brewing for months. While the company's Macau operations flourished under Jacobs' tenure, he had been agitating for the authority to run the China subsidiary with minimal supervision from Adelson.
Jacobs joined the company in March 2009 and was promoted to CEO of Sands China last August. During his one year on the job, for which he earned a base salary of $1.3 million, Jacobs oversaw the subsidiary's $2.5 billion public offering on the Hong Kong stock exchange and helped boost the revenue of Sands China's three properties.
Las Vegas Sands CEO Michael Leven became the acting CEO of Sands China, but his additional role didn't last long. It took less than a week for the company to hire Wing Chao to replace Jacobs. Chao was the executive vice president of Walt Disney Imagineering before retiring from Disney in 2009. Adelson described him as "a world renowned master planner and architect."
The day before hiring Chao, the Sands announced that its second-quarter net loss was significantly smaller than it was during the same period last year and cited the strength of its Macau and Singapore operations as the reason for the turnaround.
Station Casinos Reaches Deal with Lenders
After months of legal bickering, Station Casinos Inc. filed papers on Wednesday indicating that it has reached a settlement with the group of unsecured bond holders who had previously opposed Station's bankruptcy reorganization plan. According to Wednesday's filing, the debt holders were collectively owed $2.8 billion, though earlier documents cite between $2.3 and $2.5 billion. The settlement will extinguish the debt, which had already become greatly devalued.
Some of the bondholders will invest up to $100 million in return for 15 percent of a company that will control five of Station Casino's properties: Red Rock Resort, Boulder Station, Sunset Station, Palace Station, and the Wild Wild West. Fertitta Gaming LLC, owner of Station Casinos, will continue to manage the properties along with Colony Capital LLC and the group of debt-holding investors and banks.
Another 11 of Station's properties go up for auction next week, with Fertitta Gaming the "bidder to beat." Under the new agreement, Fertitta will be allowed to use the $100 million in the auction. This is a significant shift from previous weeks when the debt-holders opposed the set up of the auction on the grounds that it would give the Fertitta's an unfair advantage. The group of lenders has also tabled its proposed lawsuit against Station's executives.
Read more about the deal here.
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