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Private Equity Firm Backs GVC Holdings to Make a Surprise Bid

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July 28, 2015

 

The 888 takeover of Bwin was thought to be a done deal, but a private equity backed bid has stepped in to stir up the situation in the last minute. GVC Holdings has done a new deal for Bwin, which might see 888 having to rethink its own offer.

 

Stepping in on the Last Minute

 

GVC Holdings made a proposal that would see the Aim-listed owner of Sportingbet offer 122½ pence per share to Bwin’s board. The purchase would be backed by a €400 million loan from the private equity firm Cerberus Capital Management. Furthermore, the company has announced it is looking to sell extra shares to finance part of the deal. This is expected to raise around £150 million.

 

Earlier this month it seemed as 888 had already sealed the deal with Bwin. The group had accepted an offer of 104.09 pence per share by 888. Interestingly, at the time GVC had already made a higher offer to 888’s by offering to pay 110 pence per share. The new proposal would see a hefty increase to the purchase price.

 

Firm Interest Towards the Company

 

GVC Holdings’ most recent offer sends a strong signal the company is serious about acquiring the betting company to its portfolio. Analysts at Davy told in a note sent to the Telegraph, “The proposed premium over the accepted offer by 888 is such that the Bwin.party board will probably have no choice but to re-consider its acceptance of the 888 offer.”

 

Furthermore, the analysts went on to say, “We would be surprised if 888 does not come back with a counter-offer of its own”.

 

As mentioned above, the company had been offering alongside 888 previously. The private equity firm Cerberus wasn’t part of the previous offer, as the GVC had been bidding together with the Canadian company Amaya. The two companies had then considered splitting Bwin, with Amaya continuing Bwin’s poker operations and GVC keeping the sports-betting side of the business.

 

Many analysts view the current co-operation with the private equity firm a much better bid.

 

The Next Move

 

The ball is now on 888’s corner to reconsider posting a more lucrative bid. Interestingly, GVC Holdings’ chief executive, Kenny Alexander, said in the Financial Times, Bwin had “left the door open” for the company to continue bidding for the group although Bwin had already accepted the 888 offer.

 

“They were keen for us to return. A number of shareholders were keen for us to return and this morning we have returned,” Alexander was quoted saying in the newspaper.

 

Some analysts still believe 888 might end up on top in the newly opened bidding war. Activist investor, Jason Ader, told Reuters, “The 122p price is probably not enough, but it’s enough to get the Bwin board’s attention.” Ader’s SpringOwl investment vehicle is the one of the five largest shareholders behind Bwin.

 

It’ll be interesting to see which party takes the next move. If GVC manages to lure Bwin with the latest offer, it shows once again the value of private equity firms in the current climate of mergers and acquisitions.

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