Only 10 days ago, a British online gambling company, GVC Holdings, put in a takeover proposal for its rival Bwin.Party Digital Entertainment. Now, the online Gambling firm 888 Holdings, is also making a bid for Bwin.Party Digital Entertainment. A takeover deal for Bwin.Party could be considered a big moment in the online gambling industry. Bwin.Party, formed in 2011, combined Bwin’s sports betting business and PartyGaming’s online casino and online poker offerings in a very succesful way. PartyGaming was the most valuable online gambling company in the world, before it left the U.S. market in 2006. Bwin.Party, formed in 2011 by the merger of Bwin Interactive Entertainment and PartyGaming, the company offers various forms of online gambling, including casino games, poker and most importantly, sports betting. Based in Gibraltar, in 2014, it posted revenue of 611.9 million euros, or about $696 million, and currently employs more than 2,300 people in Europe, India and the United States.
At the moment, Bwin.Party is a very valuable asset to other online gambling companies because of it’s massive sports betting business. Billionaire Denise Coates’ Bet365 is the world’s biggest online sports betting company, but Bwin’s sports betting business is one of it’s biggest competitors and is the next largest. In Europe, Bwin’s sport betting business is possibly even bigger than Bet365. Bwin.Party had a market capitalization of roughly 805 million pounds, or about $1.3 billion, on the London Stock Exchange in May, in comparison to GVC’s market capitalization of roughly £280 million. That’s why GVC is teaming up. With whom? There are reports out there that Amaya, the world’s biggest publicly-traded online gambling company, will join the smaller GVC Holdings to try to buy and carve up Bwin.Party. Another player is Playtech, a gambling software developer, who thus far has not emerged as a potential bidder, but has shown considerable interest in Bwin.Party in the past and might also make a move.
The expected sale of Bwin.Party may possibly not happen any time soon, but negotiations for the company have reached a very advanced or serious stage since infamoust hedge fund manager, Jason Ader’s SpringOwl Asset Management, signed an exclusive deal with Bwin.Party last year which seemed to have put the company in play. No details of the bids have been disclosed but speculation abounds. Bwin.Party had announced last November that it had entered “preliminary discussions with a number of interested parties regarding a variety of potential business combinations.” But more recently, they informed media that it was continuing discussions “with a number of third parties,” including GVC, regarding possible mergers. In response, GVC said in a news release: “There can be no certainty that the submission of this proposal will lead to the company being selected as a proposed acquirer of Bwin.Party or, in turn, completing an acquisition.” The deal, if it takes places, would take the form of a so-called reverse merger because of the massive size of Bwin.Party relative to GVC, the company said.
GVC’s takeover bid comes just a little over two years after they joined forces with William Hill to acquire Sportingbet, another well known online gambling and sports betting company. GVC, formed in 2004, generates about half of its revenue from sports betting and processed €1.46 billion in sports wagers last year alone. Headquartered on the Isle of Man, GVC posted revenue of €224.8 million in 2014, and employs more than 700 people, which is licensed to operate in five countries, and its brands include CasinoClub and Betboo.
Amaya, 888 and Playtech have also all tried becoming big players in the online sports betting arena. For an online gambling company looking to expand it’s offerings to sports betting, buying Bwin would be the fastest and most lucrative way to do just that.
With Amaya reportedly bidding alongside GVC, they will look to create a special purpose vehicle controlled by GVC that would hold the bulk of Bwin.Party’s assets. GVC has had this kind of partnership work for them before. GVC, who focuses on so-called ‘gray markets’, in 2013, teamed up with British bookmaker William Hill to buy Sportingbet for $850 million. William Hill took Sportingbet’s online gambling operations in Australia and Spain while GVC took Sportingbet’s business in unregulated markets. It’s possible a similar agreement between GVC and Amaya could buy up and break down the assets of one of the industry’s most successful businesses and set a new standard for profit in the world of online sports betting.
