The deal comes just a week after GVC put in a more valuable offer to buy Bwin.party, following a fierce takeover battle between GVC and 888 for the Gibraltar-based internet gaming group.
888, which rejected its own takeover offer by William Hill in February, said the merger will lead to combined annual revenues of roughly $1.1 billion and cost savings of $70 million by the end of 2018. It added that it hopes to combine the two companies’ digital gaming platforms to become a leading operator in the global online gaming industry.
The Times report that the 888 offer will include a mix and match facility which will allow shareholders to decide the proportion of cash and new 888 shares they get, subject to offsetting decisions made by other Bwin.party shareholders. The company is offering shareholders at Bwin.party 39.45p and 0.404 new 888 shares for each share they own. The shareholders will own 48.9 per cent of the combined group.
GVC had made a cash and stock deal valued at £906 million, with 110p per share, more than what 888 was offering. The proposal was backed by Canadian gambling giant Amaya and looked to be the preferred choice for Bwin.party. Its bid consisted of 45 per cent cash and 55 per cent in new GVC shares.
Kenny Alexander, GVC’s chief executive, said at the time: “As far as I am concerned, the big points have been agreed . . . I would be staggered if we cannot get it done.”
However, in a sudden turn-around, Bwin.party announced today it had reached an agreement with 888 at an offer of 104.09 per share, a 1.2 per cent premium to Bwin.party’s close on Thursday, valuing the company at £898 million.
In a statement today, Bwin.party said that while GVC’s proposal had “many attractive features” its proposals also carries “additional execution risks”.
The deal will be seen as a huge victory for 888 as the company was likely to become takeover target itself again if it had been edged out of the deal by GVC.
Shares in 888 Holding have shot up since news of the deal this morning, rising 6.25 per cent to 170.00p.
Nick Batram, an analyst at Peel Hunt, said: “The deal is strategically compelling for 888 and they look to have secured Bwin.party for a reasonable price and efficient structure. There would appear to be room for GVC to come back, but 888 now looks firm favourite.”
Bwin.Party Digital Entertainment was created in 2011 after PartyGaming merged with the Austrian gambling firm Bwin.
The company launched a formal auction process in November, hiring Deutsche Bank to handle bids. Bwin’s chief executive Norbert Teufelberger will not be joining the board of the new company, but will provide it with consultancy services.
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, respectively.