Sale of Bwin.party to 888 could impact Nevada

20 July 2015

Gibraltar-based 888 Holdings won the takeover battle for Bwin.party Digital Entertainment, agreeing Friday to pay $1.4 billion for the company and creating an online gaming conglomerate.

The transaction, which requires regulatory and shareholder approval, could reverberate throughout the fledgling U.S. online gaming market, including Nevada.

888 Holdings, which has a Nevada gaming license, partners with Caesars Entertainment Corp. in the company‘s online gaming business in Nevada and New Jersey. 888 Holdings also provides the platform that operates the shared online poker website between Nevada and Delaware.

Bwin.party, also based in Gibraltar, partners with Boyd Gaming Corp. in the company‘s online gaming venture in New Jersey. Bwin.party has similar deals in Nevada with Boyd and MGM Resorts International, but the online business never has been launched. Bwin.party is not licensed in Nevada.

"We look forward to understanding more about the proposed transaction," Boyd Gaming spokesman David Strow said.

Tom Mikulich, MGM Resorts International senior vice president of business development, said the company would be "discussing with 888 and bwin.party the opportunities that this transaction brings."

888 Holdings outbid rival online gaming company GVC Holdings for Bwin.party, which placed itself up for sale last year. GVC partnered in the bid with Canada-based Amaya Gaming, which owns PokerStars.com and Full Tilt.

Eilers Research gaming analyst Adam Krejcik said he didn‘t believe the transaction would threaten PokerStars‘ dominance in the online gaming market.

"We have mixed views about Amaya losing out to 888 and how the combined entity will impact the competitive landscape," Krejcik said.

Buying Bwin.party allows 888 Holdings to increase its scale in a market. Combined revenue last year would have been about $1.1 billion, 888 Holdings said in a statement. The acquisition also will yield cost savings and lead to creation of a separate gaming technology unit that eventually can be spun off.

"We believe the deal creates one of the world’s leading online gaming operators," 888 Holdings 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."

Bwin.party shareholders will own about 48.9 percent of the merged company.

Analyst-turned-investor Jason Ader has the second-largest shareholder stake in Bwin.party through his New York-based Spring Owl hedge fund.

Ader said in a statement he brought 888 Holdings into the sale process in an effort to "maximize" shareholder value.

"I believe not only are 888 the best buyer for this company but that its management team will realize significant long-term synergy value for our shareholders with the least amount of execution and regulatory risk," Ader said.

Warwick Bartlett, CEO of Isle of Man-based Global Betting and Gaming Consultancy, said the transaction creates the fourth-largest publicly listed Internet-only gaming company based on market capitalization. Bartlett said Betfair, Amaya and Playtech are larger.

Bartlett said in a statement the transaction would be more successful than the merger that brought together Bwin and Party Gaming, a transaction that closed in January 2011.

"888 will now have their own sports book, a huge database to cross-market to and experienced sports book management," Bartlett said. "They could become a real challenger to the market leaders. Key will be a speedy takeover, aligning the management with the board’s strategy and quick integration because the market is changing."

Related Links
PokerStars Site Details
Bwin.Party Digital Entertainment plc
Boyd Gaming Gaming Vendor Information
888 Holdings
Playtech
Stars Group


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