888 Holdings will acquire bwin.party for £898 million ($1.4 billion), it was announced early Friday morning.
The news will surprise many. While 888 has been at the negotiation table since at least mid-March, a larger bid from GVC Holdings, backed by Amaya Gaming, was believed to be the front-runner until today’s statement.
Bwin.party confirmed a week ago that it had received an offer from GVC that valued the company at £908 million ($1.471 billion) and that it “could see the potential benefits of the deal to bwin.party shareholders.” In fact, GVC CEO Kenny Alexander said last week that he expected to finalize terms “in the next few days.”
As we reported on Monday, however, 888 Holdings returned to the negotiation table last weekend in an effort to convince the bwin board that its offer made more sense, due to synergies between the two companies that would facilitate integration and ultimately cut costs.
$1 Billion in Revenue
Both 888 and bwin.party have offices in Gibraltar, Israel, and Romania, for example, while bwin’s Foxy Bingo operation runs on 888 technology. 888 has previously said there is “significant industrial logic in a combination of 888 and bwin.party, benefiting both companies and all shareholders and accordingly.”
Bwin obviously agrees, while an additional factor may be that the 888 offer will keep the company’s assets intact. The GVC deal proposed to split the company, with GVC acquiring the sports book and Amaya the poker operations.
“We believe the deal creates one of the world’s leading online gaming operators,” 888’s Executive Chairman Brian Mattingley told Reuters. “It’s all about scale… When you’ve got critical mass you can ride storms and take advantage of opportunities as they come along,” he added.
The combined group will have revenue of over $1 billion and the union will lead to cost benefits of at least $70 million per year by the end of 2018 by removing duplicated costs, technology and administration fees.
Bwin shareholders will own 48.9 percent of the new firm, and will be able to vary the amount they receive in cash and new 888 shares under a “mix and match” option.
“This is a transformational opportunity for 888 in the consolidating online gaming industry, which is expected to grow significantly over the coming years,” said Mattingley.
Bwin independent non-executive director Liz Catchpole will join the 888 board on completion of the deal, as will bwin CFO Martin Weigold. CEO Norbert Teufelberger will not sit on the board, but will offer consultancy services to the new group.
The combined poker operations of 888poker and Party, meanwhile, will strengthen the former’s position as the second biggest online poker site in the world, while uniting two previously competing brands in the New Jersey regulated market.