July 17, 2015

888 agrees to buy Bwin.party for £898.3m

The company will pay Bwin.party shareholders 39.45p a share in cash and 0.404 new 888 shares for each share they own, beating a more valuable offer from GVC, which is backed by Canadian online group Amaya.

888, which in February rejected a takeover offer by William Hill, the UK’s biggest bookmaker, said it hopes to combine the companies’ digital gaming platforms and to become one of the leading operators in the global online gaming industry with combined annual revenues of roughly $1.1bn.

The deal will create a “strong player with the breadth of product, brands and geographic coverage to grow faster than either business would be able to achieve standalone,” Philip Yea, chairman of Bwin.party, said.

The enlarged group will have a strong position in sports betting, poker, casino and bingo, the companies said. 888 currently provides the technology that powers Bwin’s online casino games.

The offer represents a premium of 16.4 per cent on Bwin.party’s share price on May 14, the day before the company announced discussions about a possible tie-up. Bwin has been exploring a sale since November and its shares have fallen 10.67 per cent this year.

Bwin.party shareholders can elect to accept varying amounts of 888 shares and cash for each of their Bwin.party shares but the number of new 888 shares that will be issued will be fixed at around 341.6m. They will end up owning 48.9 per cent of the combined group.

Last week GVC confirmed it had offered 110p a share in cash and stock for Bwin, which would have valued the company at £906m. Its bid consisted of 45 per cent cash and 55 per cent in new GVC shares.

888 will finance the cash part of the takeover through a $600m term loan credit facility, the company said.

Bwin.party’s shares were down 0.9 per cent at 102p while 888’s were up 3 per cent at 165p in early London trading.

The new group is weighing whether to make bwin.party’s Studios B2B business into a standalone entity and potentially spin it off into a separate listed vehicle, with shares being distributed to 888 shareholders, the announcement said.

The companies said they estimated cost synergies achieved from the merger will amount to at least $70 million per year before tax by the end of the 2018 financial year.

Liz Catchpole, a bwin.party independent non-executive director and Martin Weigold, bwin.party’s chief financial officer, will join the 888 board as an independent non-executive director and a non-executive director.

Norbert Teufelberger, bwin.party’s chief executive, will provide consultancy services on the enlarged group’s sports-betting business.

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