GVC will implement cost synergies of €120m in the next 24 months as part of its restructuring of bwin party but chief executive Kenny Alexander has stated that the group’s focus will be to grow the business significantly and ensure return on investment.
Alexander’s comments follow news of GVC’s offer for bwin party being accepted by the company’s board this morning as it withdrew its previous recommendation for 888’s offer. The deal values bwin party at around €1.4bn (£1bn) and will be financed by a combination of cash and shares.
GVC will deliver the €120m synergies on the enlarged group by 2017, Alexander said, with around 60% of the cuts implemented throughout 2016; these will focus on marketing, staff and sourcing and IT.
Some of the synergies will be in poker and casino but most of them will occur on the sportsbook vertical. “There is lots of duplication (on the sportsbook side of the companies) and there will be greater synergies than 888 (could achieve) because we run our own sportsbook,” Alexander said.
“We’ve done it before with Sportingbet, we don’t believe there is significant cross-over (of customers having accounts with both operators) and believe our customers will have a better experience (on bwin) because it’s a better platform.”
GVC will move its betting business on to the bwin platform, “it’s better, more scaleable, has had significant investment over a long number of years and we think it’s one of the market leading platforms. We intend to develop and improve the product in coming years,” Alexander added.
In terms of marketing, many of bwin’s sponsorship agreements with some of the leading football clubs in Europe will be terminated.
“bwin’s sponsorship deals have built up the brand and its brand recognition in Europe is second to none but we think we can scale it back now and focus on growing the business.”
The GVC boss was quick to point out that the group had “no intention of exiting bwin from markets they are currently working in. The bwin focus is on regulated markets and we will focus investment in the (regulated) markets where we think we can get meaningful return on investment: where we think we can get good profits and ROI. It’s not difficult to see which regulated markets we’re talking about”.
GVC will maintain investments but will switch marketing activities from territories and channels where it believes returns are not significant. It will also intensify CRM efforts to optimise efficiencies.
Alexander added that he was looking forward to motivating and reinvigorating the bwin party staff, and that Norbert Teufelberger was staying on as a non-executive director would be a great boost to the group.
With regard to the group’s non-core assets, GVC will continue to run bwin party’s bingo business on the Dragonfish platform, and look to grow its online poker and casino sites and assets such as the World Poker Tour. “Obviously if there is an opportunity to dispose of assets in the interest of shareholder then we will look at them,” finance director Richard Cooper commented.