888 Holdings recently announced shifts in its business strategy, with a major rebrand and a new action plan. This comes in the wake of a 25% decrease in earnings for the fiscal year 2023 (FY23). Despite this setback, the company remains optimistic about its future prospects.
888 Holdings posted an adjusted EBITDA of £308.3m for FY23, marking a noticeable increase from the £217.9m reported in 2022. Moreover, the revenue for the full year surged to £1.70bn, up from £1.24bn in the previous year. However, the net loss stood at £56.4m, albeit lower than the £120.5m recorded in 2022.
Despite an increase in revenue and adjusted earnings, the adjusted profit after tax took a hit, falling by 25% to reach £48.1m. The company’s performance was in line with its Post Close Trading Update released in January 2024, which also announced several redundancies to facilitate its long-term plans.
The revenue for FY23 reached £1.70bn, marking a 38% increase from 2022. This growth was primarily driven by a strategic shift away from dotcom markets and changes in the customer mix in the UK due to increased gambling measures.
Despite a near doubling of operating expenses from £448.5m in 2022 to £819.1m in 2023, the operating profit showcased a positive trend. From a loss of £4.8m in 2022, the group reported an operating profit of £33.0m for 2023. The adjusted EBITDA margin for FY23 stood at 18.0%, up by 1.2% from FY22.
The UK and Ireland segment continues to be the group’s primary revenue source, with revenue from this segment significantly higher at £658.5m compared to £455.5m in 2022. Despite the group’s struggles, the UK accounted for 81.5% of adjusted EBITDA.
In its international business, the revenue also saw a significant increase, reaching £517.4m for the year, up from £508.3m for 2022. This growth was achieved despite compliance changes in dotcom markets and was bolstered by double-digit growth in Spain and Italy.
In a surprising move, 888 announced plans to rebrand to Evoke plc, subject to shareholder approval at the next AGM. This rebranding initiative is part of a new strategy to enhance profits and better reflect the group’s diversified operating model.
The rebranding announcement came alongside the introduction of new CEO Per Widerström, who joined 888 after eight years as CEO of Fortuna Entertainment Group.
888 also unveiled its new “Value Creation Plan” (VCP) to deliver a long-term strategy for success. The plan includes six strategic initiatives aimed at driving operational excellence and preparing the business for significant value creation.
The group aims to deliver sustainable profitable growth of 5%-9% per year, improve efficiency with an adjusted EBITDA margin expansion of c100 basis points per year, and target disciplined capital allocation, with leverage below 3.5x by the end of 2026.
Despite acknowledging the disappointing earnings for FY23, Widerström remains confident about 888’s future. With revenue for Q1 2024 projected to be between £420m and £430m, the company is targeting revenue growth of 5-9% for 2024 and leverage below 3.5x by the end of 2026.
While these are ambitious goals, the new strategic direction, coupled with the company’s market positions, proprietary technology, and experienced management team, positions 888 well for potential success in the coming years.
Showing posts with label 888. Show all posts
Showing posts with label 888. Show all posts
March 27, 2024
November 09, 2023
DraftKings Contemplated 888 Holdings Takeover
American sports betting giant DraftKings had considered a takeover of 888 Holdings amid the struggles experienced by the latter company. While the former company has not yet approached 888 with a takeover proposal, it mulled over the possibility and discussed the matter with 888 shareholders.
According to a report by the Financial Times, DraftKings considered the takeover attempt during this summer. The financial news outlet also pointed out that the gambling company had engaged in preliminary discussions about the acquisition.
In June and July, Jason Robins, DraftKings’ chief executive officer, met with representatives of FS Gaming, a major 888 shareholder. Robins reportedly discussed the takeover with FS Gaming, inquiring about the possibility of an all-stock takeover of 888 Holdings.
The talks happened around the same time 888 Holdings was on the lookout for a new chief executive officer. For reference, that position was recently taken by Per Widerström who departed from a number of NED positions to dedicate all of his time to 888.
Financial analysts believe that 888 Holdings’ precarious position makes it an ideal target for takeover attempts. In addition to its slumping share price and management and business challenges, the company had to deal with regulatory complications and a review of its license.
As a result, the Financial Times believes that DraftKings could have theoretically acquired 888 Holdings for roughly $676.9 million, based on its market capitalization at the time.
However, 888 Holdings’ massive outstanding net debt could have been a problem, according to analysts. For reference, earlier this year the company acquired the British gambling giant William Hill from Caesars Entertainment.
DraftKings’ consideration of a takeover aligns with the company’s overall expansion strategy.
In the meantime, DraftKings published its financial results for the third quarter of 2023. The company posted revenue of $790 million for the period, which attests to the success of its business strategy.
As a result of its strong Q3 results, DraftKings updated its FY 2023 guidance and is now expecting full-year revenue in the range of $4.5-4.8 billion.
The favorable results were attributed to the company’s launch in a number of new jurisdictions. The new launches are also expected to have a positive effect on the company’s adjusted EBITDA for 2023.
Speaking of launches in new jurisdictions, the company recently went live in Maine, enjoying a stellar launch during the first weekend of regulated sports betting in the state.
May 17, 2022
888 Shareholders Greenlight William Hill Acquisition
Shareholders at 888 Holdings have overwhelmingly voted in favour of the company’s intentions to acquire William Hill’s non-US portfolio. Caesar’s Entertainment, who currently own William Hill’s full suite of assets, have been anxious to offload it’s UK and European business since their colossal £2.9bn takeover of the operator back in 2020.
888 have announced that the deal should reach completion by the end of June, which should align with the timing of their permission to trade as a premium listing on the London Stock Exchange. This approval is currently pending, with the FCA (Financial Conduct Authority) expected to declare their decision imminently.
The organization’s non-executive Chairman, Lord Mendelsohn, welcomed the news, suggesting that the merger represented a major step forward for the gambling giant. He said, ‘’we look forward to completing this transformational acquisition at the end of June, creating a global online betting and gaming leader through the combination of two highly complementary businesses and two of the industry’s leading brands’’.
The Gibraltar-based operator is certainly optimistic about its future success. It’s recently undertaken a rapid expansion plan, targeting the UK as a key market in its business roadmap. Furthermore, the firm projected that if the William Hill acquisition had been secured before the commencement of 2021, last year’s gross gaming revenue figure would have eclipsed $2bn, with an EBITDA of $437m.
This has been a protracted deal, with Caesar’s initially accepting 888’s proposal a full eight months ago. Key changes were made on the detail of the deal last month in respect of new regulatory guidance; this resulted in all parties agreeing a £250m reduction in the sale price.
Should 888 Holdings get this one across the line, which is looking increasingly likely, they will assume control of all William Hill’s UK and European online and retail interests.
January 24, 2022
888 Reports Impressive Numbers For Q4 End Of Year
888’s sterling performance continues as it announces another record trading year. Gross gaming revenue saw a staggering 14% uplift, fuelled by its expansion in the regulated market space. Indeed, 74% of the company’s turnover was generated through taxable markets, substantially contributing to their impressive return.
The gaming giant, who operates in various territories throughout Europe, overlooked particularly favourable performance in the UK, Italy, Romania and Portugal. Although its numbers in Germany were slightly disappointing, this shortfall was more than made up by those making up the rest of its European sphere of influence.
The firm also experienced exponential growth in its BTC endeavours, with results up 15 points and revenue sitting at a colossal $934m. Within this, casino performance registered at a 24% uplift on last year, with sports growth slightly behind the curve at +4%.
888.com closed out the year with a -16% Q4 return on 2020’s revenue, but, given current market conditions, this sat broadly in line with the firm’s projections. Chief Executive Itai Pazner heralded ‘a year of outstanding strategic progress,’ a notion evidenced by the group’s tactical sale of its BTC and BTB bingo platform for upwards of $50m. This is further underlined by the firm’s pursuit of William Hill’s non-US assets, which, despite its protracted progress, looks set to complete in the next financial quarter.
Pazner will undoubtedly be pleased to see the business delivering these sorts of numbers, with performance only set to strengthen in 2022 as it chases down its ambitious roadmap.
September 23, 2020
888 confirms Lord Mendelsohn as inbound chairman for critical 2021 review
888 Holdings has filed a notice with the London Stock Exchange, confirming that Lord Jonathan Mendelsohn will replace Brian Mattingley as its designate company chairman.
The appointment of Lord Mendelsohn as new chairman is scheduled to take place at 888’s next annual general meeting in May 2021, with Mattingley officially resigning from all governance duties.
In its notice, 888 highlighted Lord Mendelsohn’s extensive experience within the gambling sector, having co-founded strategic M&A advisory Oakvale Capital which focuses on igaming, entertainment and media investments.
A high-profile appointment, Lord Mendelsohn is best recognised as a key adviser to Tony Blair, helping the former PM to execute his 1997 election-winning New Labour campaign strategy.
Lord Mendelsohn’s appointment has garnered media wide attention, closely following last week’s announcement by Flutter Entertainment that former Labour deputy leader Tom Watson had joined the company as a regulatory advisor.
UK gambling faces a critical end of year, as the government ramps up preparations to review the 2005 Gambling Act, focusing on improving industry safeguards and consumer standards.
Lord Mendelsohn, commente:: “I am very excited to join the Board of such a world-class gaming operator. 888 is a company that I have long admired during my more than 20 years working with companies in the gaming and gambling industries.
“The Group has a number of very exciting opportunities and I am looking forward to working closely with the Board and the management team to continue to deliver the Group’s growth strategy and generate further stakeholder value.
This morning’s LSE filing sees Brian Mattingley confirm that he will end his 15-year tenure as a 888 director, having re-established the online gambling group as a FTSE blue-chip enterprise.
January 23, 2019
British bookies go from favourites to American outsiders
What starts in the US, the cliche goes, inevitably ends up in the UK (burger restaurants, assaulting fellow shoppers on Black Friday and syphilis are favourite examples). But the Americans are not always so keen to embrace our exports.
There are, of course, examples of Brits and our brands smashing it in the US: the broadcaster Alistair Cooke, the Beatles and (so the company’s advertising slogan told us) the industrial conglomerate Hanson, which liked to brag how it was “a company from over here that’s doing rather well over there”. But those occasional triumphs are offset with a long list of wonderful-sounding sales pitches that never quite seemed to deliver much – apart from swingeing losses.
Which brings us to the UK gambling industry, a trade that has been talking about cracking America for a period seemingly longer than Cooke’s whole career.
Apart from the odd arrest of British business folk, very little ever came of these ambitious plans. But then, last May, everything appeared to change. The value of London-listed gambling firms – including 888, Paddy Power Betfair and William Hill – collectively surged by more than £1.5bn after the US supreme court struck down a nationwide ban on sports betting that had stood for 26 years. The Professional and Amateur Sports Protection Act of 1992 (Paspa) – which effectively outlawed sports betting in the US with the exception of a few states – was suddenly unconstitutional.
Gambling execs rejoiced. Cigars were lit; deals were unveiled; and share prices went briskly, er, down.
In a note by analysts at Canaccord earlier this month, as the stockbroker studied the gambling sector in a reporting season, the number-crunchers observed: “The UK sector is trading on close to a four-year valuation low, and there is a lot of bad news baked into the price.”
There are all sorts of factors playing into that, of course. There are the inevitable tax rises and regulatory changes that the industry has to contend with in Europe: but not everything is going perfectly with the American dream, either.
There, what bookies might have gained on the Paspa swings they are now fretting about losing on the Wire Act roundabout.
Earlier this month the US Department of Justice performed a U-turn by ruling that the Wire Act – which it had previously said outlawed only cross-state wire communications for sports betting – also contains “prohibitions [that] sweep beyond sports gambling”.
Heads were scratched, share prices retreated and consolidation plans were given even more of a hearing than usual.
In a note in advance of a trading statement from William Hill last week, analysts at the investment bank Berenberg said that the bookie was “now ripe to be a takeover target”, after its share price almost halved over the past year.
Hill’s has been at the forefront of efforts in the US, too, so taking a punt on the company means betting heavily that a liberalising US market will compensate for the lost revenues in its established jurisdictions, where fixed-odds betting terminals have been gelded and the bookies fear more regulation to prevent addiction.
Cooke, of course, once filed a dispatch about this. In a 2001 Letter from America, he reported: “Heartening news this week that a drug has appeared experimentally which promises, one day, to cure even compulsive gamblers.”
That day has yet to arrive. There’s a parallel in there somewhere.
There are, of course, examples of Brits and our brands smashing it in the US: the broadcaster Alistair Cooke, the Beatles and (so the company’s advertising slogan told us) the industrial conglomerate Hanson, which liked to brag how it was “a company from over here that’s doing rather well over there”. But those occasional triumphs are offset with a long list of wonderful-sounding sales pitches that never quite seemed to deliver much – apart from swingeing losses.
Which brings us to the UK gambling industry, a trade that has been talking about cracking America for a period seemingly longer than Cooke’s whole career.
Apart from the odd arrest of British business folk, very little ever came of these ambitious plans. But then, last May, everything appeared to change. The value of London-listed gambling firms – including 888, Paddy Power Betfair and William Hill – collectively surged by more than £1.5bn after the US supreme court struck down a nationwide ban on sports betting that had stood for 26 years. The Professional and Amateur Sports Protection Act of 1992 (Paspa) – which effectively outlawed sports betting in the US with the exception of a few states – was suddenly unconstitutional.
Gambling execs rejoiced. Cigars were lit; deals were unveiled; and share prices went briskly, er, down.
In a note by analysts at Canaccord earlier this month, as the stockbroker studied the gambling sector in a reporting season, the number-crunchers observed: “The UK sector is trading on close to a four-year valuation low, and there is a lot of bad news baked into the price.”
There are all sorts of factors playing into that, of course. There are the inevitable tax rises and regulatory changes that the industry has to contend with in Europe: but not everything is going perfectly with the American dream, either.
There, what bookies might have gained on the Paspa swings they are now fretting about losing on the Wire Act roundabout.
Earlier this month the US Department of Justice performed a U-turn by ruling that the Wire Act – which it had previously said outlawed only cross-state wire communications for sports betting – also contains “prohibitions [that] sweep beyond sports gambling”.
Heads were scratched, share prices retreated and consolidation plans were given even more of a hearing than usual.
In a note in advance of a trading statement from William Hill last week, analysts at the investment bank Berenberg said that the bookie was “now ripe to be a takeover target”, after its share price almost halved over the past year.
Hill’s has been at the forefront of efforts in the US, too, so taking a punt on the company means betting heavily that a liberalising US market will compensate for the lost revenues in its established jurisdictions, where fixed-odds betting terminals have been gelded and the bookies fear more regulation to prevent addiction.
Cooke, of course, once filed a dispatch about this. In a 2001 Letter from America, he reported: “Heartening news this week that a drug has appeared experimentally which promises, one day, to cure even compulsive gamblers.”
That day has yet to arrive. There’s a parallel in there somewhere.
September 10, 2018
888sport launches in New Jersey
Yaniv Sherman, 888's senior vice-president and head of commercial development, has relocated to the company's New Jersey office to spearhead the company’s expansion plans across the US after the 888sport brand was launched in the state.
With 888sport now available in New Jersey, it is the first time that 888 has offered sports betting to customers in the US. 888 CEO Itai Frieberger described the move as a “major milestone” for the company.
With FanDuel and Caesars also now live in New Jersey, there are now six operators offering online betting in the state, with DraftKings, SugarHouse and William Hill all available.
“This provides 888 with a unique and truly multi-product proposition in what is currently the largest regulated US state,” Frieberger said.
“888 has been committed to developing its position in the US since launching in Nevada, the first regulated US state, nearly six years ago and today we are the only operator with a presence in all three regulated US states.
“We now have our sport, casino and poker products all operational in the US and are continually developing our proposition, brands and technology to ensure that the group remains exceptionally well positioned to capture the potentially significant future growth opportunities as new regulation allows.”
888sport has been launched in New Jersey in partnership with Kambi, the company’s sportsbook provider across global regulated markets.
Kambi, which recently launched the Cash Out live ticket system in New Jersey, also went live with Teaser+ to mark the start of the 2018-19 NFL American football season this past weekend.
Teaser+, a new version of the teaser parlay, offers a different method of pricing the wager, with Kambi’s in-house trading team generating a price based on each individual leg of a player’s chosen parlay.
“When we considered how the market priced the classic teaser, we felt the processes involved had failed to evolve with the wider industry, or kept pace with technology, therefore we identified and implemented a more efficient and transparent way of offering these bets,” Kambi CEO Kristian Nylen said.
In a further development in New Jersey’s online sports betting market, DraftKings has become the latest sports betting provider to add PayPal to its list of payment deposit options – a move that is likely to provide a further boost to punters in the state.
FanDuel, SugarHouse and Caesars sportsbooks already offered PayPal, according to Legal Sports Report, which added that credit card decline rates are still understood to be at about 50% in the state for online gambling, having improved from about 75% five years ago.
This Wednesday, the figures covering the first full month of online sports betting in New Jersey featuring DraftKings will be revealed by the state. DraftKings said last week that it had already processed one million sports bets in New Jersey since launching its sportsbook in August.
With 888sport now available in New Jersey, it is the first time that 888 has offered sports betting to customers in the US. 888 CEO Itai Frieberger described the move as a “major milestone” for the company.
With FanDuel and Caesars also now live in New Jersey, there are now six operators offering online betting in the state, with DraftKings, SugarHouse and William Hill all available.
“This provides 888 with a unique and truly multi-product proposition in what is currently the largest regulated US state,” Frieberger said.
“888 has been committed to developing its position in the US since launching in Nevada, the first regulated US state, nearly six years ago and today we are the only operator with a presence in all three regulated US states.
“We now have our sport, casino and poker products all operational in the US and are continually developing our proposition, brands and technology to ensure that the group remains exceptionally well positioned to capture the potentially significant future growth opportunities as new regulation allows.”
888sport has been launched in New Jersey in partnership with Kambi, the company’s sportsbook provider across global regulated markets.
Kambi, which recently launched the Cash Out live ticket system in New Jersey, also went live with Teaser+ to mark the start of the 2018-19 NFL American football season this past weekend.
Teaser+, a new version of the teaser parlay, offers a different method of pricing the wager, with Kambi’s in-house trading team generating a price based on each individual leg of a player’s chosen parlay.
“When we considered how the market priced the classic teaser, we felt the processes involved had failed to evolve with the wider industry, or kept pace with technology, therefore we identified and implemented a more efficient and transparent way of offering these bets,” Kambi CEO Kristian Nylen said.
In a further development in New Jersey’s online sports betting market, DraftKings has become the latest sports betting provider to add PayPal to its list of payment deposit options – a move that is likely to provide a further boost to punters in the state.
FanDuel, SugarHouse and Caesars sportsbooks already offered PayPal, according to Legal Sports Report, which added that credit card decline rates are still understood to be at about 50% in the state for online gambling, having improved from about 75% five years ago.
This Wednesday, the figures covering the first full month of online sports betting in New Jersey featuring DraftKings will be revealed by the state. DraftKings said last week that it had already processed one million sports bets in New Jersey since launching its sportsbook in August.
August 31, 2017
888 to pay almost £8m for 'failing vulnerable customers' and addicts
Online gambling firm 888 has been ordered to pay of over £7.8m for not helping vulnerable customers to limit the damage of their gambling addictions.
The Gambling Commission on Thursday said that, due to a technical failure in 888’s systems, over 7,000 customers who had chosen to self-exclude from their casino, poker or sports betting platform were still granted access their accounts on 888’s bingo platform.
Self-exclusion is a facility offered by gambling sites for people who have decided that they wish to stop gambling – in some cases because they fear they have become addicted – for at least six months and wish to be supported in their decision to quit.
The commission said that in 888’s case, the issue went undetected for “a prolonged period of time” which meant that customers were able to deposit a cumulative total of £3.5m into their accounts, and then continue to gamble, for over 13 months.
888 did have a self-exclusion procedures in place, but their system was “not robust enough and failed to protect potentially vulnerable customers”, the commission said.
“Safeguarding consumers is not optional. This penalty package of just under £8m reflects the seriousness of 888’s failings to protect vulnerable customers,” said Sarah Harrison, chief executive of the commission.
In addition to the overarching charges, the commission also said that 888 had failed to recognise “visible signs of problem gambling behaviour displayed by an individual customer, which was so significant that it resulted in criminal activity”.
In that particular case, the customer staked over £1.3m, including £55,000 stolen from an employer.
Over more than a year, the customer placed a significant number of bets and gambled, on average, three to four hours a day.
“The lack of interaction with the customer, given the frequency, duration and sums of money involved in the gambling, raised serious concerns about 888’s safeguarding of customers at-risk of gambling harm,” the commission said.
"The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt,” Ms Harrison said.
The £7.8m sum includes repayment of the £3.5m of deposits made by those customer who had chosen to self-excluded and it also includes compensation of £62,000 to the employer from whom money was stolen in that one particular case.
The commission said that a further £4.25m would be paid to a socially responsible cause with the idea that it helps finance measures to clamp down on gambling-related harm.
For “future assurance”, the commission said that it had also ordered an independent audit of 888’s processes relating to customer protection.
888, in a statement, said that it fully cooperated with the commission throughout this process.
It said that it “regrets the historic failings highlighted by the review and accepts the conclusion of the review”.
It also listed a number of changes and improvements that have been put in place to prevent similar occurrences in future.
“The review process has pushed 888 to enhance its responsible gambling technology and policies and leaves it well placed to continue to succeed in an environment where it will engage with customers in a way that those customers and regulators will demand going forward,” the company said.
The Gambling Commission on Thursday said that, due to a technical failure in 888’s systems, over 7,000 customers who had chosen to self-exclude from their casino, poker or sports betting platform were still granted access their accounts on 888’s bingo platform.
Self-exclusion is a facility offered by gambling sites for people who have decided that they wish to stop gambling – in some cases because they fear they have become addicted – for at least six months and wish to be supported in their decision to quit.
The commission said that in 888’s case, the issue went undetected for “a prolonged period of time” which meant that customers were able to deposit a cumulative total of £3.5m into their accounts, and then continue to gamble, for over 13 months.
888 did have a self-exclusion procedures in place, but their system was “not robust enough and failed to protect potentially vulnerable customers”, the commission said.
“Safeguarding consumers is not optional. This penalty package of just under £8m reflects the seriousness of 888’s failings to protect vulnerable customers,” said Sarah Harrison, chief executive of the commission.
In addition to the overarching charges, the commission also said that 888 had failed to recognise “visible signs of problem gambling behaviour displayed by an individual customer, which was so significant that it resulted in criminal activity”.
In that particular case, the customer staked over £1.3m, including £55,000 stolen from an employer.
Over more than a year, the customer placed a significant number of bets and gambled, on average, three to four hours a day.
“The lack of interaction with the customer, given the frequency, duration and sums of money involved in the gambling, raised serious concerns about 888’s safeguarding of customers at-risk of gambling harm,” the commission said.
"The 888 sanction package will ensure those affected don’t lose out, that the operator pays the price for its failings via a sum that will go to tackling gambling-related harm, and that independent assurance will be given to see that lessons are learnt,” Ms Harrison said.
The £7.8m sum includes repayment of the £3.5m of deposits made by those customer who had chosen to self-excluded and it also includes compensation of £62,000 to the employer from whom money was stolen in that one particular case.
The commission said that a further £4.25m would be paid to a socially responsible cause with the idea that it helps finance measures to clamp down on gambling-related harm.
For “future assurance”, the commission said that it had also ordered an independent audit of 888’s processes relating to customer protection.
888, in a statement, said that it fully cooperated with the commission throughout this process.
It said that it “regrets the historic failings highlighted by the review and accepts the conclusion of the review”.
It also listed a number of changes and improvements that have been put in place to prevent similar occurrences in future.
“The review process has pushed 888 to enhance its responsible gambling technology and policies and leaves it well placed to continue to succeed in an environment where it will engage with customers in a way that those customers and regulators will demand going forward,” the company said.
August 19, 2016
William Hill takeover bid collapses
An ambitious £3.4bn bid for William Hill has collapsed after the bookmaker refused to open talks with suitors Rank Group and 888 over what would have been a highly-complex, three-way deal.
Rank, the owner of Grosvenor casino and Mecca bingo halls, and online gambling company 888 made two offers for the bookie, of 394p-a-share and 364p, but both were dismissed by William Hill as too low and “highly opportunistic”. In the light of William Hill’s refusal to engage, the pair have dropped their approach, which had been dogged all along by stock market scepticism the deal was too complicated to pull-off and required too much debt.
A Takeover Panel deadline requiring the bidders to make a formal offer or walk away was due to expire on Sunday.
“We strongly believe that the transaction would have created significant value for all three sets of shareholders,” said Henry Birch, the boss of Rank. Itai Freiberger, 888’s chief executive, added that he was “disappointed” William Hill “did not share our vision”.
The mooted deal would have involved Rank merging with 888 to buy the bookie. Mr Birch would not comment on whether a deal between the two bidders was still on the cards, although he did say that “we’ve enjoyed working with 888”.
William Hill had publicly clashed with the bidders and disputed the value of the offers they had submitted. Gareth Davis, the bookie’s chief executive, said today that it would focus on its stand-alone turnaround strategy, adding that Rank and 888’s offer “fell down on value, risk, strategy and leverage”.
In a fillip to investors, he also said the company had enjoyed a “good start” to the second-half of the year and that annual operating profits were now expected to be at the top end of the £260m to £280m range.
However, William Hill remains isolated. Rivals Ladbrokes and Corals are merging and Paddy Power and Betfair have combined to create a gambling giant.
There has been speculation that CVC, the private equity giant that used to own William Hill and now owns Sky Bet, could make a bid for the bookie. But Berenberg analysts said today that they doubted William Hill would draw another suitor, arguing that “a private equity fund would need to re-leverage” the company “very substantially”.
William Hill shares, which had faded in recent days amid speculation a deal would fail, fell a further 4.7p to 303.1p. 888 rose 4.75p to 205p and Rank slid 2.3p to 221.6p.
Rank, the owner of Grosvenor casino and Mecca bingo halls, and online gambling company 888 made two offers for the bookie, of 394p-a-share and 364p, but both were dismissed by William Hill as too low and “highly opportunistic”. In the light of William Hill’s refusal to engage, the pair have dropped their approach, which had been dogged all along by stock market scepticism the deal was too complicated to pull-off and required too much debt.
A Takeover Panel deadline requiring the bidders to make a formal offer or walk away was due to expire on Sunday.
“We strongly believe that the transaction would have created significant value for all three sets of shareholders,” said Henry Birch, the boss of Rank. Itai Freiberger, 888’s chief executive, added that he was “disappointed” William Hill “did not share our vision”.
The mooted deal would have involved Rank merging with 888 to buy the bookie. Mr Birch would not comment on whether a deal between the two bidders was still on the cards, although he did say that “we’ve enjoyed working with 888”.
William Hill had publicly clashed with the bidders and disputed the value of the offers they had submitted. Gareth Davis, the bookie’s chief executive, said today that it would focus on its stand-alone turnaround strategy, adding that Rank and 888’s offer “fell down on value, risk, strategy and leverage”.
In a fillip to investors, he also said the company had enjoyed a “good start” to the second-half of the year and that annual operating profits were now expected to be at the top end of the £260m to £280m range.
However, William Hill remains isolated. Rivals Ladbrokes and Corals are merging and Paddy Power and Betfair have combined to create a gambling giant.
There has been speculation that CVC, the private equity giant that used to own William Hill and now owns Sky Bet, could make a bid for the bookie. But Berenberg analysts said today that they doubted William Hill would draw another suitor, arguing that “a private equity fund would need to re-leverage” the company “very substantially”.
William Hill shares, which had faded in recent days amid speculation a deal would fail, fell a further 4.7p to 303.1p. 888 rose 4.75p to 205p and Rank slid 2.3p to 221.6p.
July 26, 2016
William Hill is lukewarm on ambitious three-way merger deal
William Hill has fired a shot across the bows of suitors Rank Group and 888 amid scepticism that the pair would be able to pull off an ambitious three-way tie-up with Britain’s biggest bookmaker.
Rank, the operator of Grosvenor casinos and Mecca bingo halls, and online gambling business 888 are eyeing a consortium approach for struggling William Hill, in what would mark the latest deal to shake-up the gambling industry.
The potential bid leaked at the weekend, forcing the high street bookie to confirm today that it had received “a highly preliminary approach” that did not set out price or other terms.
William Hill said it would “listen to and consider any proposal which might be forthcoming”, but it also warned that it was “not clear” that a tie-up with Rank and 888 would “enhance” its “strategic position or deliver superior value”.
Analysts were similarly cautious about the prospects for a deal, given the complexity of a consortium bid. William Hill shares initially leapt as much as 12.8pc but only closed up 4.8pc at 328.8p as investors tempered their excitement about a tie-up as the day wore on.
Simon French, an analyst at stockbroker Cenkos, warned that “it is not immediately apparent” that 888 and Rank have the “skill set” to revive William Hill’s troubled online sportsbook or its estate of about 2,300 betting shops.
Meanwhile, Davy analysts said that “questions relating to funding would need to be answered” because, even combined, 888 and Rank are still much smaller than the high street bookie.
While a deal between William Hill and 888 makes sense and a takeover was attempted by the former last year, the Davy analysts were more sceptical about the “strategic rationale” of combining a betting shop business with a casino and gambling operator like Rank.
Both 888 and Rank have dominant shareholders - the Shaked brothers at the former and Malaysian billionaire Quek Leng Chan at the latter – which analysts said further complicates a deal and could make a merger unattractive to Hill’s investors.
Under Takeover Panel rules, 888 and Rank have until August 21 to make a formal offer or walk away. It is possible that William Hill, left vulnerable after its board ousted under-performing chief executive James Henderson last week, now attracts a rival bidder.
888 shares rose 3.4pc and Rank slipped 0.5pc.
Britain's gambling industry is in the midst of consolidation, with Paddy Power and Betfair completing a merger earlier this year and Ladbrokes and Coral in the midst of securing regulatory approval for a tie-up.
The Competition and Markets Authority is expected to publish its final report into the Ladbrokes-Coral deal tomorrow. In May, it provisionally recommended they sell as many as 400 betting shops to assuage concerns about competition.
Rank, the operator of Grosvenor casinos and Mecca bingo halls, and online gambling business 888 are eyeing a consortium approach for struggling William Hill, in what would mark the latest deal to shake-up the gambling industry.
The potential bid leaked at the weekend, forcing the high street bookie to confirm today that it had received “a highly preliminary approach” that did not set out price or other terms.
William Hill said it would “listen to and consider any proposal which might be forthcoming”, but it also warned that it was “not clear” that a tie-up with Rank and 888 would “enhance” its “strategic position or deliver superior value”.
Analysts were similarly cautious about the prospects for a deal, given the complexity of a consortium bid. William Hill shares initially leapt as much as 12.8pc but only closed up 4.8pc at 328.8p as investors tempered their excitement about a tie-up as the day wore on.
Simon French, an analyst at stockbroker Cenkos, warned that “it is not immediately apparent” that 888 and Rank have the “skill set” to revive William Hill’s troubled online sportsbook or its estate of about 2,300 betting shops.
Meanwhile, Davy analysts said that “questions relating to funding would need to be answered” because, even combined, 888 and Rank are still much smaller than the high street bookie.
While a deal between William Hill and 888 makes sense and a takeover was attempted by the former last year, the Davy analysts were more sceptical about the “strategic rationale” of combining a betting shop business with a casino and gambling operator like Rank.
Both 888 and Rank have dominant shareholders - the Shaked brothers at the former and Malaysian billionaire Quek Leng Chan at the latter – which analysts said further complicates a deal and could make a merger unattractive to Hill’s investors.
Under Takeover Panel rules, 888 and Rank have until August 21 to make a formal offer or walk away. It is possible that William Hill, left vulnerable after its board ousted under-performing chief executive James Henderson last week, now attracts a rival bidder.
888 shares rose 3.4pc and Rank slipped 0.5pc.
Britain's gambling industry is in the midst of consolidation, with Paddy Power and Betfair completing a merger earlier this year and Ladbrokes and Coral in the midst of securing regulatory approval for a tie-up.
The Competition and Markets Authority is expected to publish its final report into the Ladbrokes-Coral deal tomorrow. In May, it provisionally recommended they sell as many as 400 betting shops to assuage concerns about competition.
March 29, 2016
Why Paddy Betfair and 888 are the two best gamers for investment
Trading is a losing game if it is your chief strategy. You’ll win big sometimes and you’ll lose big other times, but taken together it will be a loss unless you are a time traveler. Chances are, you’re not, so long term investment is the only long term winning strategy. Warren Buffett demonstrated this long ago, and it still holds true for any industry. This is precisely why we only held 0.5% in Caesars puts before the big Davis Report release last week. Though correct on outcome, I was wrong on magnitude which led to a loss. We can try again in May with a smaller sum when the next big court decision is scheduled, but a 0.5% is easily recoverable.
Why Paddy Betfair and 888 are the Two Best Gamers for InvestmentBottom line, Paddy Power Betfair and 888 are the best companies to hold long term. 888 is higher by 15.6% since January 19, and while Paddy Power is more of a math problem considering the merger, its growth is obvious and in the right places. Both companies represent two models of growth, so hedging between them makes sense. 888 is the model of go-it-alone growth, not intentionally, but that is what ended up happening. The advantages are less leverage, less internal politics, more control over itself, less contracts and more just doing business. The disadvantages are that going it alone makes it harder to command market share all else being equal. Given that both companies are good at what they do, both may end up growing nicely long term with both strategies. It’s just good to have a stake in both for diversification.
The politics are already evident with Paddy Power Betfair as former Paddy CEO Andy McCue has chosen to leave in order to pursue new opportunities. Perhaps this was planned, amicable, the ultimate goal and all the rest. But even if it was, it still shows the downsides of mergers. You can have talent coming from both sides, but one side will always be dominant over the other, and hopefully the gain will be greater than the loss. That’s just the nature of business reality.
Last week we dealt with the tax blow to 888, and that really is the ultimate factor here between Paddy Power Betfair and 888, which in itself is a sad thing. Both companies’ growth strategies seem to be working, so the difference between them is really who can scale up best to defend against new tax regimes. When tax questions become the ultimate competition between businesses, what you have is no longer business but defensive maneuvering around politicians. It’s a whole different and more arbitrary game.
With taxes you need scale to overcome it. That’s the essence of the tragedy because the higher the taxes, the more advantage big business has over small business. This is what spurs mergers in the first place. The more politics tries (in name only) to even out the playing field, the more it ends up skewing it. On the one hand you have 888, which if it can grow itself out of its new tax hole (it looks like it’s going in that direction), will have all the profits to itself. On the other hand you have Paddy Power Betfair, which is trying to overcome the new tax regime by merging. Both strategies are worth a try, which is why both Paddy Power Betfair and 888 are worth investing in with equal weighting. Who will win? Maybe one, maybe both, maybe to different degrees. The big picture is that they are both safe investments.
Regardless of capital gains, Paddy Power Betfair will be giving out 50% of its profits in dividends, a pretty good long term balance between shareholder reward and continued investment. Unregulated market revenue is not very significant at 6%, so if it is suddenly shut down by some legislative act or other, it won’t be a very big deal. For Betfair alone, revenue is up equally in sports, gaming, and Befair US all at around 20%, which shows a very balanced business. On top of that, total revenue growth itself of 31% was driven by an almost equal 27% increase in active customers. This means most of Betfair’s growth for the latest quarter was organic.
Mobile revenue growth is up 63% for Betfair. Mobile will continue to outpace all other growth outlets so no complaints there. This summer, New Jersey horseracing will open up, not a huge bump but still a good sign of diversification. Back to Paddy Power alone, there was 18% growth in amounts staked for 2015 and net revenue growth of 19%, meaning amounts staked is almost 1:1 to revenue, also a sign of good organic growth.
Perhaps the most important sign of growth for Paddy alone (this will get less confusing when they start reporting together) is that 44% of its top line last year was in Australia. This almost makes Paddy Power de facto an Australian company. The Australian market should excite all gaming investors because the country is both geographically and politically relatively isolated. There are no EU referendums to worry about, no major terrorism problems right now, no Eurozone currency debacles, nothing of the kind. It’s just hanging out there in the middle of the Pacific, not bothering anyone and being relatively little bothered by political developments compared to other hubs.
An investment in Paddy Power Betfair is a dual investment in the UK and Australia. UK is at 40% of operating profit (Paddy alone), meaning both markets constitute 84% of total business for Paddy alone, and the merged group is heading towards heavier Australian activity. Paddy profit in the UK is down 21% for the year, but up a phenomenal 52% in Australia. A good number but nothing to get excited about long term is growth in Italy, Ireland, and Rest of World at 10%, but Italy and Ireland are Eurozone bottom-feeders so this growth is not to be relied on, and the US is unpredictable with the continuing evolution of its complicated gambling laws.
Bottom line is, if you’re looking for stability and relative insulation from political earthquakes, somewhere you can put your money, ignore it, and check back in 10 years, Paddy Power Betfair is the place to be. Together with 888, they are both good hedges against each other as to which will outperform the other, while both will probably do well regardless of who does better. While 888 may have an easier time with internal politics and deciding its ultimate direction, Paddy Power Betfair may have an easier time with overcoming the new tax regime and growing past it. Both corporate strategies are good to have exposure to.
Why Paddy Betfair and 888 are the Two Best Gamers for InvestmentBottom line, Paddy Power Betfair and 888 are the best companies to hold long term. 888 is higher by 15.6% since January 19, and while Paddy Power is more of a math problem considering the merger, its growth is obvious and in the right places. Both companies represent two models of growth, so hedging between them makes sense. 888 is the model of go-it-alone growth, not intentionally, but that is what ended up happening. The advantages are less leverage, less internal politics, more control over itself, less contracts and more just doing business. The disadvantages are that going it alone makes it harder to command market share all else being equal. Given that both companies are good at what they do, both may end up growing nicely long term with both strategies. It’s just good to have a stake in both for diversification.
The politics are already evident with Paddy Power Betfair as former Paddy CEO Andy McCue has chosen to leave in order to pursue new opportunities. Perhaps this was planned, amicable, the ultimate goal and all the rest. But even if it was, it still shows the downsides of mergers. You can have talent coming from both sides, but one side will always be dominant over the other, and hopefully the gain will be greater than the loss. That’s just the nature of business reality.
Last week we dealt with the tax blow to 888, and that really is the ultimate factor here between Paddy Power Betfair and 888, which in itself is a sad thing. Both companies’ growth strategies seem to be working, so the difference between them is really who can scale up best to defend against new tax regimes. When tax questions become the ultimate competition between businesses, what you have is no longer business but defensive maneuvering around politicians. It’s a whole different and more arbitrary game.
With taxes you need scale to overcome it. That’s the essence of the tragedy because the higher the taxes, the more advantage big business has over small business. This is what spurs mergers in the first place. The more politics tries (in name only) to even out the playing field, the more it ends up skewing it. On the one hand you have 888, which if it can grow itself out of its new tax hole (it looks like it’s going in that direction), will have all the profits to itself. On the other hand you have Paddy Power Betfair, which is trying to overcome the new tax regime by merging. Both strategies are worth a try, which is why both Paddy Power Betfair and 888 are worth investing in with equal weighting. Who will win? Maybe one, maybe both, maybe to different degrees. The big picture is that they are both safe investments.
Regardless of capital gains, Paddy Power Betfair will be giving out 50% of its profits in dividends, a pretty good long term balance between shareholder reward and continued investment. Unregulated market revenue is not very significant at 6%, so if it is suddenly shut down by some legislative act or other, it won’t be a very big deal. For Betfair alone, revenue is up equally in sports, gaming, and Befair US all at around 20%, which shows a very balanced business. On top of that, total revenue growth itself of 31% was driven by an almost equal 27% increase in active customers. This means most of Betfair’s growth for the latest quarter was organic.
Mobile revenue growth is up 63% for Betfair. Mobile will continue to outpace all other growth outlets so no complaints there. This summer, New Jersey horseracing will open up, not a huge bump but still a good sign of diversification. Back to Paddy Power alone, there was 18% growth in amounts staked for 2015 and net revenue growth of 19%, meaning amounts staked is almost 1:1 to revenue, also a sign of good organic growth.
Perhaps the most important sign of growth for Paddy alone (this will get less confusing when they start reporting together) is that 44% of its top line last year was in Australia. This almost makes Paddy Power de facto an Australian company. The Australian market should excite all gaming investors because the country is both geographically and politically relatively isolated. There are no EU referendums to worry about, no major terrorism problems right now, no Eurozone currency debacles, nothing of the kind. It’s just hanging out there in the middle of the Pacific, not bothering anyone and being relatively little bothered by political developments compared to other hubs.
An investment in Paddy Power Betfair is a dual investment in the UK and Australia. UK is at 40% of operating profit (Paddy alone), meaning both markets constitute 84% of total business for Paddy alone, and the merged group is heading towards heavier Australian activity. Paddy profit in the UK is down 21% for the year, but up a phenomenal 52% in Australia. A good number but nothing to get excited about long term is growth in Italy, Ireland, and Rest of World at 10%, but Italy and Ireland are Eurozone bottom-feeders so this growth is not to be relied on, and the US is unpredictable with the continuing evolution of its complicated gambling laws.
Bottom line is, if you’re looking for stability and relative insulation from political earthquakes, somewhere you can put your money, ignore it, and check back in 10 years, Paddy Power Betfair is the place to be. Together with 888, they are both good hedges against each other as to which will outperform the other, while both will probably do well regardless of who does better. While 888 may have an easier time with internal politics and deciding its ultimate direction, Paddy Power Betfair may have an easier time with overcoming the new tax regime and growing past it. Both corporate strategies are good to have exposure to.
September 16, 2015
William Hill is left chasing the field as tie-ups reshape sector
William Hill began the year as Britain's biggest bookmaker but a series of mergers is pushing it down the pecking order and putting it under pressure to react.
Driven by tighter regulation and tax pressures that are taking chunks out of profits, big betting names Ladbrokes and Gala Coral are combining, as are Betfair and Ireland's Paddy Power.
Online gambling firm GVC also agreed a £1.1bn (€1.5bn) deal for larger rival Bwin.Party this month - with the same factors fuelling consolidation.
The larger companies can divert savings into higher marketing spend and potentially offer a wider array of improved products to gamblers on smart phones and tablets. Smaller rivals are then squeezed out and these new groups' lower costs, enhanced market share and larger revenues all help to soften bigger tax charges.
High street shops where gamblers can bet on horse or greyhound racing have been a feature of British and Irish towns since the 1960s. Betting "in play" on televised football matches has also attracted a younger generation of tech-savy sports fans as the gambling scene has moved online.
William Hill grasped these trends before rivals but now appears to have ground to make up.
"William Hill could benefit from a potential partnering up with another operator, now it has more credible competition coming. But it's hard to see exactly who," HSBC analysts said.
Led by CEO James Henderson, a 30-year company insider who replaced veteran Ralph Topping last year, it was William Hill who made one of the first moves of 2015, tabling a £720m bid for online gambling firm 888.
That deal collapsed but the M&A wave since has narrowed the field, including the removal of Betfair, which analysts had tipped as a fit.
For William Hill, 888 remains the obvious choice. The firm has a market capitalisation five times smaller than William Hill's and would add leading technology, strong casino and bingo positions and a lot of cost synergies to its arsenal, analysts say.
The only other big player is Bet365, it is likely too expensive and has an exposure to unregulated markets William Hill wants to avoid.
Driven by tighter regulation and tax pressures that are taking chunks out of profits, big betting names Ladbrokes and Gala Coral are combining, as are Betfair and Ireland's Paddy Power.
Online gambling firm GVC also agreed a £1.1bn (€1.5bn) deal for larger rival Bwin.Party this month - with the same factors fuelling consolidation.
The larger companies can divert savings into higher marketing spend and potentially offer a wider array of improved products to gamblers on smart phones and tablets. Smaller rivals are then squeezed out and these new groups' lower costs, enhanced market share and larger revenues all help to soften bigger tax charges.
High street shops where gamblers can bet on horse or greyhound racing have been a feature of British and Irish towns since the 1960s. Betting "in play" on televised football matches has also attracted a younger generation of tech-savy sports fans as the gambling scene has moved online.
William Hill grasped these trends before rivals but now appears to have ground to make up.
"William Hill could benefit from a potential partnering up with another operator, now it has more credible competition coming. But it's hard to see exactly who," HSBC analysts said.
Led by CEO James Henderson, a 30-year company insider who replaced veteran Ralph Topping last year, it was William Hill who made one of the first moves of 2015, tabling a £720m bid for online gambling firm 888.
That deal collapsed but the M&A wave since has narrowed the field, including the removal of Betfair, which analysts had tipped as a fit.
For William Hill, 888 remains the obvious choice. The firm has a market capitalisation five times smaller than William Hill's and would add leading technology, strong casino and bingo positions and a lot of cost synergies to its arsenal, analysts say.
The only other big player is Bet365, it is likely too expensive and has an exposure to unregulated markets William Hill wants to avoid.
September 08, 2015
888 plans new acquisitions
Following the very bitter and failed acquisition of online gaming company bwin.party by 888 Holdings the firm has come out fighting saying it has other “strategic” acquisitions lined up.
Speaking to the Times Newspaper 888 Chairman Brian Mattingley said that they had dropped out of the battle for bwin.party because if they had raised their own offer there would not have been enough funds to ‘carry out the synergies and cost savings that it had identified ‘said Mattingley.
GVC was announced last week as the preferred choice of the bwin.party board following an increased bid which then triggered 888 to withdraw from the process. But Mattingley has stated that the failure to acquire bwin.party does not mean his own company is a target for takeover, with William Hill previously involved in purchasing 888.
“We are not a target,” Mattingley said. “We will do practical and strategic acquisitions particularly to build our sport betting.”
“It is going to be a challenge,” he said. “We will rise to it. We will not be cast aside. We are not an also-ran and we are not a one-trick pony. We have proved that we have got the critical mass.”
Speaking to the Times Newspaper 888 Chairman Brian Mattingley said that they had dropped out of the battle for bwin.party because if they had raised their own offer there would not have been enough funds to ‘carry out the synergies and cost savings that it had identified ‘said Mattingley.
GVC was announced last week as the preferred choice of the bwin.party board following an increased bid which then triggered 888 to withdraw from the process. But Mattingley has stated that the failure to acquire bwin.party does not mean his own company is a target for takeover, with William Hill previously involved in purchasing 888.
“We are not a target,” Mattingley said. “We will do practical and strategic acquisitions particularly to build our sport betting.”
“It is going to be a challenge,” he said. “We will rise to it. We will not be cast aside. We are not an also-ran and we are not a one-trick pony. We have proved that we have got the critical mass.”
Betfair and Paddy Power agree terms for £5bn merger to create online gambling giant, but job losses on the cards
Gambling group Betfair and rival Paddy Power have agreed the terms of a £5billion merger to create a new Dublin-based online gaming giant to be called Paddy Power Betfair.
On completion of the merger, Paddy Power shareholders will own 52 per cent of the new entity, while Betfair shareholders will hold 48 per cent.
The merger will result in the creation of one of the world's biggest online gambling groups, with 7,000 staff and approximately £1.2billion in sales.
But with plans for around £50million in annual cost savings, job losses could be on the cards if the merger goes ahead, the firms warned.
The companies said that while no decisions on job losses have been taken, there is potential for cutbacks in some operational and support functions, which 'may involve some headcount reduction.'
Gerald Corbett, Betfair's chairman, said: 'The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands.
'Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.'
The deal - dubbed 'Betty Power' in the industry - will bring together Paddy Power's 336 shops in the UK and 252 stores in Ireland with Betfair's online betting exchange.
According to industry data, the new group would enjoy a 16 per cent share of the UK online gambling sector, surpassing that of the soon to be merged Ladbrokes Coral Group on 14 per cent, as well as current market leader William Hill and privately-owned Bet365.
Both companies will continue to run separate brands in the UK, Ireland and Italy after the merger.
Around 80 per cent of the newly merged group's annual revenues are expected to stem from online business.
Betfair boss Breon Corcoran will become the new group's chief executive and the firm will be listed on the London Stock Exchange and the Irish Stock Exchange.
The firms confirmed Paddy Power shareholders will receive a special dividend of £58million.
Shareholders are expected to vote on the deal in December, with the merger due to complete in the first quarter of 2016.
Against a backdrop of higher taxes in the UK and tighter regulation,the betting industry has seen a string of deals this year as firms bid to secure their slice of the competitive online gambling market.
Aside from the Ladbrokes and Gala Coral all-share deal agreed in July, GVC Holdings last week looked to have won a bidding war for online poker firm Bwin.party Digital Entertainment, squeezing out a rival bid from 888 Holdings.
Commentators have suggested that, as a result, a marriage of William Hill and 888 could now also be on the cards.
On completion of the merger, Paddy Power shareholders will own 52 per cent of the new entity, while Betfair shareholders will hold 48 per cent.
The merger will result in the creation of one of the world's biggest online gambling groups, with 7,000 staff and approximately £1.2billion in sales.
But with plans for around £50million in annual cost savings, job losses could be on the cards if the merger goes ahead, the firms warned.
The companies said that while no decisions on job losses have been taken, there is potential for cutbacks in some operational and support functions, which 'may involve some headcount reduction.'
Gerald Corbett, Betfair's chairman, said: 'The combination makes huge strategic sense by bringing together two industry leading and successful businesses and providing enlarged scale, capability and distinctive, complementary brands.
'Under the guidance of a strong and proven combined management team, this merger truly represents an attractive opportunity for both Paddy Power and Betfair to enhance their position in online betting and gaming and to deliver synergies, customer benefits and shareholder value.'
The deal - dubbed 'Betty Power' in the industry - will bring together Paddy Power's 336 shops in the UK and 252 stores in Ireland with Betfair's online betting exchange.
According to industry data, the new group would enjoy a 16 per cent share of the UK online gambling sector, surpassing that of the soon to be merged Ladbrokes Coral Group on 14 per cent, as well as current market leader William Hill and privately-owned Bet365.
Both companies will continue to run separate brands in the UK, Ireland and Italy after the merger.
Around 80 per cent of the newly merged group's annual revenues are expected to stem from online business.
Betfair boss Breon Corcoran will become the new group's chief executive and the firm will be listed on the London Stock Exchange and the Irish Stock Exchange.
The firms confirmed Paddy Power shareholders will receive a special dividend of £58million.
Shareholders are expected to vote on the deal in December, with the merger due to complete in the first quarter of 2016.
Against a backdrop of higher taxes in the UK and tighter regulation,the betting industry has seen a string of deals this year as firms bid to secure their slice of the competitive online gambling market.
Aside from the Ladbrokes and Gala Coral all-share deal agreed in July, GVC Holdings last week looked to have won a bidding war for online poker firm Bwin.party Digital Entertainment, squeezing out a rival bid from 888 Holdings.
Commentators have suggested that, as a result, a marriage of William Hill and 888 could now also be on the cards.
September 04, 2015
Bwin.party board accepts GVC takeover bid, withdraws 888 recommendation
The board of bwin.party this (Friday) morning accepted a takeover bid from GVC Holdings and withdrew its earlier recommendation to accept an offer from rival online gaming company 888 Holdings.
The buy-out offer from GVC of 25 pence in cash and 0.231 new GVC shares equates to about 129.64 pence per share in bwin.party, tagging the total value of the deal at just over £1bn (€1.4bn/$1.6bn).
The offer is at a 12.5% premium to bwin.party's closing share price on the London Stock Exchange on Thursday and a 45% premium to its stock price since the company first started receiving takeover proposals in May.
“In recommending the offer from GVC, the board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group's growth strategy in an increasingly competitive marketplace,” bwin.party chairman Philip Yea said.
“As a result of these and other factors, including the proven track record of GVC's management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the board has withdrawn its recommendation for the 888 offer and is now advising bwin.party shareholders to vote in favour of the offer from GVC.”
Kenneth Alexander, chief executive officer of GVC, added: “GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree.
“Sports betting is in our DNA and leveraging GVC's experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long term value for combined shareholders.
“GVC has been working closely with bwin.party's management and has identified many talented individuals with whom it looks forward to working to ensure the future success of the enlarged business.”
Bwin.party had accepted a £900m cash-and-share offer from 888 in July, despite being presented with a higher offer from GVC.
Earlier this week, bwin.party announced that it had received a revised takeover proposal from 888, but then GVC chairman Lee Feldman insisted that his company was “not prepared to walk away” if his company’s bid was rejected in favour of a lower offer from 888.
The buy-out offer from GVC of 25 pence in cash and 0.231 new GVC shares equates to about 129.64 pence per share in bwin.party, tagging the total value of the deal at just over £1bn (€1.4bn/$1.6bn).
The offer is at a 12.5% premium to bwin.party's closing share price on the London Stock Exchange on Thursday and a 45% premium to its stock price since the company first started receiving takeover proposals in May.
“In recommending the offer from GVC, the board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group's growth strategy in an increasingly competitive marketplace,” bwin.party chairman Philip Yea said.
“As a result of these and other factors, including the proven track record of GVC's management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the board has withdrawn its recommendation for the 888 offer and is now advising bwin.party shareholders to vote in favour of the offer from GVC.”
Kenneth Alexander, chief executive officer of GVC, added: “GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree.
“Sports betting is in our DNA and leveraging GVC's experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long term value for combined shareholders.
“GVC has been working closely with bwin.party's management and has identified many talented individuals with whom it looks forward to working to ensure the future success of the enlarged business.”
Bwin.party had accepted a £900m cash-and-share offer from 888 in July, despite being presented with a higher offer from GVC.
Earlier this week, bwin.party announced that it had received a revised takeover proposal from 888, but then GVC chairman Lee Feldman insisted that his company was “not prepared to walk away” if his company’s bid was rejected in favour of a lower offer from 888.
September 01, 2015
888 raises the stakes in Bwin bidding war
Online gambling company 888 has upped the stakes in its £1bn takeover battle with GVC by raising its bid for Bwin.Party.
Bwin, which offers poker, bingo and sports betting online, revealed on Tuesday that 888 had made a revised takeover proposal and that it was now evaluating the bid. It must weigh the offer against a competing proposal submitted by Sportingbet owner GVC, which is gate-crashing a deal already agreed between Bwin and 888.
The terms of 888’s revised cash-and-shares approach have not been not disclosed, although it is understood that the company has lifted the paper element of its offer to increase the value of its bid to around 115p a share. Bwin said the proposal came with “a number of pre-conditions” that are thought include an increase in the break fee to about 1pc of the overall deal value.
GVC, which is much smaller than Bwin and so would need to structure the deal as a reverse takeover, is understood to have made its latest cash-and-shares bid on Friday evening. The gambling group said its offer valued Bwin at 131p a share and a spokesman for GVC said the bid "is without conditions which 888 has now introduced".
The latest twist in the takeover saga marks a success for Bwin’s board, which has effectively engineered a bidding war between 888 and Aim-listed GVC.
Although Bwin recommended an £898.3m offer - the equivalent of 104.09p a share - from 888 in mid-July, rival suitor GVC refused to concede defeat and made a takeover proposal worth about £1bn last month.
Bwin’s board and shareholders had concerns with GVC’s bid, including questions over whether the combined business will secure a main market listing on the London Stock Exchange and a New Jersey gambling licence. However, Bwin kept the takeover battle alive by working with GVC to overcome those worries.
Once satisfied with GVC's proposal, Bwin last Thursday incited another round of bids from both suitors by inviting the Sportingbet owner to make a formal offer on its “best terms”.
Bwin, which has been up for sale since last November, said it would now consult with its “key shareholders” over coming days to decide which of the two competing proposals is in investors’ “best interests”.
Bwin, which offers poker, bingo and sports betting online, revealed on Tuesday that 888 had made a revised takeover proposal and that it was now evaluating the bid. It must weigh the offer against a competing proposal submitted by Sportingbet owner GVC, which is gate-crashing a deal already agreed between Bwin and 888.
The terms of 888’s revised cash-and-shares approach have not been not disclosed, although it is understood that the company has lifted the paper element of its offer to increase the value of its bid to around 115p a share. Bwin said the proposal came with “a number of pre-conditions” that are thought include an increase in the break fee to about 1pc of the overall deal value.
GVC, which is much smaller than Bwin and so would need to structure the deal as a reverse takeover, is understood to have made its latest cash-and-shares bid on Friday evening. The gambling group said its offer valued Bwin at 131p a share and a spokesman for GVC said the bid "is without conditions which 888 has now introduced".
The latest twist in the takeover saga marks a success for Bwin’s board, which has effectively engineered a bidding war between 888 and Aim-listed GVC.
Although Bwin recommended an £898.3m offer - the equivalent of 104.09p a share - from 888 in mid-July, rival suitor GVC refused to concede defeat and made a takeover proposal worth about £1bn last month.
Bwin’s board and shareholders had concerns with GVC’s bid, including questions over whether the combined business will secure a main market listing on the London Stock Exchange and a New Jersey gambling licence. However, Bwin kept the takeover battle alive by working with GVC to overcome those worries.
Once satisfied with GVC's proposal, Bwin last Thursday incited another round of bids from both suitors by inviting the Sportingbet owner to make a formal offer on its “best terms”.
Bwin, which has been up for sale since last November, said it would now consult with its “key shareholders” over coming days to decide which of the two competing proposals is in investors’ “best interests”.
August 24, 2015
GVC Holdings states it will only re-bid for bwin.party if 888 increases current offer
Having placed its takeover bid past the £1.1 billion mark, UK news sources have stated that GVC Holdings governance could “walk away” from its ongoing battle with 888 Holdings for bwin.party Entertainment.
Speculation has been rife regarding the takeover of bwin.party and its two bidding rivals GVC and 888. Last week The Times reported that GVC Holdings and its bid advisor Cerberus Capital Management were considering bidding 130p per share for the operator.
However it appears that GVC Governance will only increase its cash and shares offer for bwin.party if 888 raises its current bid. Furthermore the London AIM listed operator is willing to turn its back on the takeover battle if 888 remains the recommended bidder with its current £908 million value of bwin.party assets.
London business analysts have noted that bwin.party and its advisors have played a clever game regarding its takeover position and the interest of the bidding parties. The underperforming operator has been marked as a game changing deal for both GVC and 888. The bidding operators have differing sets of plans for bwin.party should they manage to acquire the company.
Noting its vantage point, analysts and industry commentators have stated that it is likely that bwin.party governance will hold out for bid increases from both 888 and GVC. It is further noted that the operator will look to drag on bid negotiations which have been ongoing since this February, as governance looks to secure the best deal for shareholders.
Speculation has been rife regarding the takeover of bwin.party and its two bidding rivals GVC and 888. Last week The Times reported that GVC Holdings and its bid advisor Cerberus Capital Management were considering bidding 130p per share for the operator.
However it appears that GVC Governance will only increase its cash and shares offer for bwin.party if 888 raises its current bid. Furthermore the London AIM listed operator is willing to turn its back on the takeover battle if 888 remains the recommended bidder with its current £908 million value of bwin.party assets.
London business analysts have noted that bwin.party and its advisors have played a clever game regarding its takeover position and the interest of the bidding parties. The underperforming operator has been marked as a game changing deal for both GVC and 888. The bidding operators have differing sets of plans for bwin.party should they manage to acquire the company.
Noting its vantage point, analysts and industry commentators have stated that it is likely that bwin.party governance will hold out for bid increases from both 888 and GVC. It is further noted that the operator will look to drag on bid negotiations which have been ongoing since this February, as governance looks to secure the best deal for shareholders.
August 17, 2015
How Wall Street Money Transformed Online Gambling Forever
In September 2013, New York money man Jason Ader, who runs SpringOwl Asset Management, flew to Israel to meet Ruth Parasol, the California-born former billionaire who played a big role in creating the online gambling industry. Parasol founded PartyGaming, which was the biggest online poker company in the world until it left the U.S. market after Congress passed new legislation in 2006.
Parasol had watched her company enter into a non-prosecution deal with U.S. prosecutors and her former partner, Anurag Dikshit, pay a $300 million fine and plead guilty to violating a U.S. law that the Justice Department no longer believes prohibits online poker or casino games. PartyGaming merged with Bwin Interactive, which specialized in online sports betting, to create publicly-traded Bwin.Party Digital Entertainment. But the Gibraltar-based company was flailing and Parasol, who still owned a big chunk of the company’s stock, was looking to sell a block of it, partly because of reasons related to her divorce to Russ DeLeon, who also owned a lot of shares.
Ader met Parasol in her house in the Israeli seaside town of Herzliya and DeLeon was there, too. Parasol wanted to meet the guy who was going to buy a portion of her shares. Parasol hadn’t run a gambling company in years, but Ader, a former Wall Street gaming analyst, was amazed by her knowledge of what was going on in the online gambling industry, particularly the evolution of games on mobile devices. Ader apparently passed Parasol’s test and ended up buying about half of her stake and much of DeLeon’s stock as well for some $100 million, making his firm Bwin.Party’s third-biggest shareholder.
These sorts of symbolic hand-offs have been reshaping the online gambling industry, moving it away from the bold risk-taking entrepreneurs who pioneered the business and putting new players in control, often in a way that represents a clean break from an era where the creators of the online gambling industry were bumping into governments and law enforcement, particularly in the U.S. Just like Michael Milken’s financings had backed Steve Wynn to remake Las Vegas years ago, the transformation of online gambling is being driven by Wall Street and some of the biggest names in finance, firms like Blackstone, BlackRock, Apollo, and Cerberus Capital Management. In the next few weeks, the reshaping of the online gambling industry will hit a new stage as a bidding war sparked by Ader for Bwin.Party comes to its conclusion.
Ader made an impact quickly. His block of Bwin.Party stock came with a board seat, but after he didn’t approve of the direction that Bwin Interactive’s co-founder, Norbert Teufelberger (who was once arrested at a press conference in France), was moving Bwin.Party as CEO, Ader successfully launched an activist campaign to reconstruct the board. He also helped push the board to hire Deutsche Bank to look for a company to buy Bwin.Party. By the summer of 2014, the company was in play.
At the same time that Ader was agitating for a sale at Bwin.Party, the credit division of New York-based Blackstone Group, the biggest private equity firm in the world, was preparing to back David Baazov, the then 33-year-old founder of tiny Amaya, to buy PokerStars, the world’s biggest online poker company. PokerStars, based in the Isle of Man, had been founded by Isai Scheinberg and his son, Mark Scheinberg, but they were ready to sell for the right price—in cash. The duo had run into legal problems after PokerStars continued to offer online poker in the U.S. after Congress passed the 2006 Unlawful Internet Gambling Enforcement Act. They always maintained PokerStars had operated legally in the U.S., but the company ended up paying $731 million to settle with federal prosecutors and still was having trouble returning to U.S. states like New Jersey that had opened up to online poker after the Justice Department reversed its position on the law government lawyers had used to go after it. Isai Scheinberg, who lives in the Isle of Man, had remained under indictment (Mark was never charged) and the Scheinbergs were ready to deal.
With the backing of Blackstone’s credit division (which committed $1 billion) and New York-based BlackRock, the world’s biggest asset manager, Amaya bought PokerStars and its sister company, Full Tilt Poker, in a $4.9 billion cash deal in August of 2014. The deal would not have been possible without Blackstone’s credit division, known on Wall Street as GSO. Amaya was a small company. In fact, when Baazov first delivered to the Scheinbergs a $3 billion commitment letter on Blackstone’s letterhead, the Scheinbergs found it necessary to verify with Blackstone that the letter was authentic. “It was like them telling me, ‘Not to say that you guys forged it, but we got to talk to them directly,’ ”. The deal was also reliant on Baazov getting banks like Deutsche Bank and Barclays to lend against online gambling assets, the first such big loan ever.
The Amaya deal for PokerStars shocked the online gambling industry. One of the biggest impacts was felt by Bwin.Party, which traditionally ran PokerStars’ biggest competitor and saw its stock plunge in the aftermath of the announcement of the deal. The stock fell so sharply in the summer of 2014 that at one point Ader considered trying to find a way for his financial firm to purchase the whole company itself while moving the board to expand its search for the right buyer. “I didn’t like how the process was being handled, I had to push 888 (Holdings) which was a perfect strategic buyer, to get invited,” says Ader.
GVC Holdings, a small and publicly-traded online gambling company that focuses on so-called gray markets where laws are unclear, made a bid in May that was at one point backed by Amaya to buy Bwin.Party. Not long after GVC jumped into the ring, 888 Holdings, a publicly-traded Gibraltar company focused on online poker and casino games and founded by two sets of Israeli brothers, launched its own bid backed by JPMorgan Chase and Barclays, as two big banks once again committed to loan money against online gambling assets.
In July, 888 struck a deal to buy Bwin.Party for about $1.4 billion. The deal would create a serious rival for Amaya and Pokerstars, which currently dominate online poker outside of the U.S. But it’s not a done deal yet. GVC Holdings lost Amaya’s backing but gained new financial commitments from Cerberus Capital Management, billionaire Stephen Feinberg’s New York financial firm. As a result, GVC moved in August and submitted a slightly richer bid for Bwin.Party than the 888 deal, but GVC’s offer is largely a stock deal that would leave Bwin.Party shareholders holding stock in the riskier combined entity. For now, shares of Bwin.Party are up 40% in the last year. On the surface, it seems 888 is more likely to win out.
Wall Street money has not solved all of the online gambling industry’s problems. In the U.S., for example, still only three states—New Jersey, Nevada and Delaware— have regulatory regimes for online gambling and hopes that important states like California might usher in a new golden age of online gambling have so been disappointed. Even Amaya’s PokerStars has been yet unable to get back into New Jersey after just about one year of trying. There had been assumptions that such a reentry would be swift under a new Wall Street-backed ownership structure. Still, with big financial firm backing, the online gambling business looks a lot different today than it did just over a year ago.
Parasol had watched her company enter into a non-prosecution deal with U.S. prosecutors and her former partner, Anurag Dikshit, pay a $300 million fine and plead guilty to violating a U.S. law that the Justice Department no longer believes prohibits online poker or casino games. PartyGaming merged with Bwin Interactive, which specialized in online sports betting, to create publicly-traded Bwin.Party Digital Entertainment. But the Gibraltar-based company was flailing and Parasol, who still owned a big chunk of the company’s stock, was looking to sell a block of it, partly because of reasons related to her divorce to Russ DeLeon, who also owned a lot of shares.
Ader met Parasol in her house in the Israeli seaside town of Herzliya and DeLeon was there, too. Parasol wanted to meet the guy who was going to buy a portion of her shares. Parasol hadn’t run a gambling company in years, but Ader, a former Wall Street gaming analyst, was amazed by her knowledge of what was going on in the online gambling industry, particularly the evolution of games on mobile devices. Ader apparently passed Parasol’s test and ended up buying about half of her stake and much of DeLeon’s stock as well for some $100 million, making his firm Bwin.Party’s third-biggest shareholder.
These sorts of symbolic hand-offs have been reshaping the online gambling industry, moving it away from the bold risk-taking entrepreneurs who pioneered the business and putting new players in control, often in a way that represents a clean break from an era where the creators of the online gambling industry were bumping into governments and law enforcement, particularly in the U.S. Just like Michael Milken’s financings had backed Steve Wynn to remake Las Vegas years ago, the transformation of online gambling is being driven by Wall Street and some of the biggest names in finance, firms like Blackstone, BlackRock, Apollo, and Cerberus Capital Management. In the next few weeks, the reshaping of the online gambling industry will hit a new stage as a bidding war sparked by Ader for Bwin.Party comes to its conclusion.
Ader made an impact quickly. His block of Bwin.Party stock came with a board seat, but after he didn’t approve of the direction that Bwin Interactive’s co-founder, Norbert Teufelberger (who was once arrested at a press conference in France), was moving Bwin.Party as CEO, Ader successfully launched an activist campaign to reconstruct the board. He also helped push the board to hire Deutsche Bank to look for a company to buy Bwin.Party. By the summer of 2014, the company was in play.
At the same time that Ader was agitating for a sale at Bwin.Party, the credit division of New York-based Blackstone Group, the biggest private equity firm in the world, was preparing to back David Baazov, the then 33-year-old founder of tiny Amaya, to buy PokerStars, the world’s biggest online poker company. PokerStars, based in the Isle of Man, had been founded by Isai Scheinberg and his son, Mark Scheinberg, but they were ready to sell for the right price—in cash. The duo had run into legal problems after PokerStars continued to offer online poker in the U.S. after Congress passed the 2006 Unlawful Internet Gambling Enforcement Act. They always maintained PokerStars had operated legally in the U.S., but the company ended up paying $731 million to settle with federal prosecutors and still was having trouble returning to U.S. states like New Jersey that had opened up to online poker after the Justice Department reversed its position on the law government lawyers had used to go after it. Isai Scheinberg, who lives in the Isle of Man, had remained under indictment (Mark was never charged) and the Scheinbergs were ready to deal.
With the backing of Blackstone’s credit division (which committed $1 billion) and New York-based BlackRock, the world’s biggest asset manager, Amaya bought PokerStars and its sister company, Full Tilt Poker, in a $4.9 billion cash deal in August of 2014. The deal would not have been possible without Blackstone’s credit division, known on Wall Street as GSO. Amaya was a small company. In fact, when Baazov first delivered to the Scheinbergs a $3 billion commitment letter on Blackstone’s letterhead, the Scheinbergs found it necessary to verify with Blackstone that the letter was authentic. “It was like them telling me, ‘Not to say that you guys forged it, but we got to talk to them directly,’ ”. The deal was also reliant on Baazov getting banks like Deutsche Bank and Barclays to lend against online gambling assets, the first such big loan ever.
The Amaya deal for PokerStars shocked the online gambling industry. One of the biggest impacts was felt by Bwin.Party, which traditionally ran PokerStars’ biggest competitor and saw its stock plunge in the aftermath of the announcement of the deal. The stock fell so sharply in the summer of 2014 that at one point Ader considered trying to find a way for his financial firm to purchase the whole company itself while moving the board to expand its search for the right buyer. “I didn’t like how the process was being handled, I had to push 888 (Holdings) which was a perfect strategic buyer, to get invited,” says Ader.
GVC Holdings, a small and publicly-traded online gambling company that focuses on so-called gray markets where laws are unclear, made a bid in May that was at one point backed by Amaya to buy Bwin.Party. Not long after GVC jumped into the ring, 888 Holdings, a publicly-traded Gibraltar company focused on online poker and casino games and founded by two sets of Israeli brothers, launched its own bid backed by JPMorgan Chase and Barclays, as two big banks once again committed to loan money against online gambling assets.
In July, 888 struck a deal to buy Bwin.Party for about $1.4 billion. The deal would create a serious rival for Amaya and Pokerstars, which currently dominate online poker outside of the U.S. But it’s not a done deal yet. GVC Holdings lost Amaya’s backing but gained new financial commitments from Cerberus Capital Management, billionaire Stephen Feinberg’s New York financial firm. As a result, GVC moved in August and submitted a slightly richer bid for Bwin.Party than the 888 deal, but GVC’s offer is largely a stock deal that would leave Bwin.Party shareholders holding stock in the riskier combined entity. For now, shares of Bwin.Party are up 40% in the last year. On the surface, it seems 888 is more likely to win out.
Wall Street money has not solved all of the online gambling industry’s problems. In the U.S., for example, still only three states—New Jersey, Nevada and Delaware— have regulatory regimes for online gambling and hopes that important states like California might usher in a new golden age of online gambling have so been disappointed. Even Amaya’s PokerStars has been yet unable to get back into New Jersey after just about one year of trying. There had been assumptions that such a reentry would be swift under a new Wall Street-backed ownership structure. Still, with big financial firm backing, the online gambling business looks a lot different today than it did just over a year ago.
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.
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.
July 13, 2015
888 play final hand battle for Bwin.party
Online poker operator 888 Group believes it is still at the table in the battle for the online gaming company Bwin.party.
The group, which runs a popular poker website as well as online casino gaming, has arranged a meeting with Bwin this week.
The move comes despite Bwin’s board declaring last week that a rival offer from GVC and Canadian poker giant Amaya was its preferred option.
After that announcement, GVC chief executive Kenny Alexander said was “just days away” from completing the deal.
A spokesperson for GVC yesterday downplayed the challenge from 888: “We have put forward a very compelling offer for Bwin, and are pleased to have received the support of the Bwin board.”
Both bids point to synergies between their operations and that of Bwin, and the potential savings that could come from increased scale.
While 888 provides the technology behind Bwin’s poker platform via its Dragonfish business-to-business service, GVC argues that its bid offers even greater cost synergies.
Alexander has confirmed that part of the cost savings would come from job losses – removing some of those who would be doing duplicate roles in the expanded company.
If its bid were successful, GVC would retain Bwin’s sports betting company. Amaya, which owns the market-leading PokerStars website, would take over the poker business.
The announcement from the Bwin board last week confirmed that GVC would buy its shares at a value of 110p a share, and said it “has determined to work with GVC so that they can finalise their offer over the coming days.”
The joint bid from GVC is very similar to the one it made for Sportingbet, alongside bookmaker William Hill in March 2013.
A final decision by the Bwin board is expected later this week.
The group, which runs a popular poker website as well as online casino gaming, has arranged a meeting with Bwin this week.
The move comes despite Bwin’s board declaring last week that a rival offer from GVC and Canadian poker giant Amaya was its preferred option.
After that announcement, GVC chief executive Kenny Alexander said was “just days away” from completing the deal.
A spokesperson for GVC yesterday downplayed the challenge from 888: “We have put forward a very compelling offer for Bwin, and are pleased to have received the support of the Bwin board.”
Both bids point to synergies between their operations and that of Bwin, and the potential savings that could come from increased scale.
While 888 provides the technology behind Bwin’s poker platform via its Dragonfish business-to-business service, GVC argues that its bid offers even greater cost synergies.
Alexander has confirmed that part of the cost savings would come from job losses – removing some of those who would be doing duplicate roles in the expanded company.
If its bid were successful, GVC would retain Bwin’s sports betting company. Amaya, which owns the market-leading PokerStars website, would take over the poker business.
The announcement from the Bwin board last week confirmed that GVC would buy its shares at a value of 110p a share, and said it “has determined to work with GVC so that they can finalise their offer over the coming days.”
The joint bid from GVC is very similar to the one it made for Sportingbet, alongside bookmaker William Hill in March 2013.
A final decision by the Bwin board is expected later this week.
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