888 Holdings to Buy bwin.party for $1.4 Billion
After months of hard negotiations, the battle for bwin.party Group ended on Friday, July 17, when a statement from 888 Holdings announced 888 Holdings had acquired the online company $1.4 billion.
"The boards of 888 and bwin.party are pleased to announce that they have reached an agreement on the terms of a recommended offer pursuant to which [888 Holdings] will acquire the entire issued and to be issued ordinary share capital of bwin.party," the note stated.
According to the statement, bwin.party shareholders will receive 39.45 pence in cash for each bwin.party share and 0.404 in new 888 shares. The total cost of the operation is estimated to be of £898.3 million, or approximately $1.4 billion.
"This morning's announcement marks a historical day for both 888 and bwin.party," 888 Holdings Chief Operation Officer Itai Freiberger commented right after the deal became public. "Once completed, this deal will create one of the leading operators in the growing global online gaming industry."
This deal will create one of the leading operators in the growing global online gaming industry.
In Freiberger's opinion, by acquiring the bwin.party Group, 888 will consolidate its position in verticals like online poker and casino gambling, while helping 888's and bwin.party's product to grow in other highly competitive industries like sports betting.
"The business will have an even greater footprint in regulated markets," he said. "With bwin.party's market-leading sports product and brands joining 888's established market presence in poker, casino, and bingo, this deal will create a business with strong positions in all four verticals.
"Both 888 and bwin.party are self-developed technology companies, and we are excited by the growth opportunities presented by the integration of these proprietary complementing assets. We will benefit from the combined poker player liquidity, not to mention the significant upside in cross-selling between the unified customer base and product offering. I am confident that this deal will take us to the next level."
Right before thanking all 888's employees, shareholders, and business partners for their support of the company's growth, Freiberger concluded by saying that he believes the recommendation from the bwin.party board to be "a strong vote of confidence in our ability to make this step change a reality."
This deal will take us to the next level.
Takeover Talks Started in November 2014
As expected, the markets have reacted positively to the announcement, with the value of 888 Holdings' shares (888.L) increasing by 4.5 percent right at the opening of the London Stock Exchange on Friday.
"Over recent months, 888 has been deeply engaged in a competitive bid to acquire bwin.party," the Executive Chairman at 888 Holdings Brian Mattingley said. "I am delighted to say that today we have announced that the bwin.party board of directors has recommended our offer to its shareholders."
To strike the deal and take over the bwin.party Group, 888 Holdings managed to outbid a joint venture created by Amaya Gaming and GVC Holdings. During the past weeks, Amaya and GVC have been reportedly close to purchasing the bwin.party Group, with their last bid being an 110 pence cash-and-shares offer worth approximately £900 million.
"Upon completion [of the deal], we will have the opportunity to become one of the leading operators in the global online gaming industry with combined annual revenues of more than one billion dollars," Mattingley continued. He also explained that the board anticipates that this transaction "will be earnings enhancing to 888 in the first full year of ownership."
"This is an exciting but of course challenging multi-year project," Mattingley went on to say. "The priority when we begin to integrate the two fantastic businesses together will be to ensure that our brilliant teams continue to fire on all cylinders and perform. We will not take out eyes off the ball and will continue to be as innovative and forward thinking as we have been in recent years which has delivered continued excellent results."
Contacts between 888 Holdings and the bwin.party group began almost one year ago, as the Financial Times reported "advanced talks" between the two parties in November 2014.
At that time, however, it became immediately clear that the road to control bwin.party Group was not going to be an easy one as other gambling giants such as Amaya, Playtech, and Ladbrokes were reportedly interested in making a deal of their own.
To further complicate things, in January 2015, 888 Holding became a takeover target itself when Britain's biggest bookmaker, poker and casino room William Hill bid approximately 750 million pounds ($1.14 billion) to take control of the company. At that time, however, the offer did not lead to any deal, with rumors suggesting that the Shaked family, one of the founders of 888 Holdings, was not satisfied by the offer.
888 to Consolidate in Europe and U.S.
The conclusion of the deal allows 888 to consolidate its position in the online poker industry and reenter some of the European regulated markets that the company has exited during the past months.
Already in control of 888poker, the second-biggest online poker site in the world with a seven-day average of 2,300 real-money ring-game players, 888 Holdings will now incorporate other important assets such as partypoker, which is currently the seventh-biggest poker site in the world with a seven-day average of 1,000 real money ring game players.
The acquisition of bwin.party allows 888 to increase its footprint in Europe's regulated markets. Once the deal is completed, the group will enter the French market through the country's third-biggest operator, partypoker.fr, the Italian market through partypoker.it, and also increase its market share in Spain, where 888poker.es runs alongside partypoker.es.