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Is sports betting company GVC Holdings taking over Bwin?

17 May 2015

The sports betting and gaming company GVC Holdings Plc. announced that it had filed a bid for larger rival Bwin.Party Digital Entertainment Plc. The consolidation activities in the gambling industry have gained momentum for some time. Higher taxes and new rules in some of the largest markets are the cause. The Bwin shares increased by 9.6 per cent promptly on Friday and in the hope of an imminent deal touched the course to the high of 99.70 pence. GVC said if Bwin would agree on a deal this would be treated as a reverse takeover by Bwin. On Thursday Bwin held a market value of around 734 million pounds (1.15 billion USD), which is more than twice as high compared to the one of GVC. Panmure Gordon, an analyst said to Reuters that it could be a very good deal for GVC. He expects that the transaction will be assessed up to around one billion pounds. The GVC shares fell slightly on the London Stock Exchange. Bwin confirmed on Friday that there are still on-going discussions with a number of third parties, including GVC.

The falling share prices

Bwin in its present constellation was formed by the merger of the sports betting group Bwin with PartyGaming online poker group in 2011. In November last year it was announced that the group was considering a number of proposals of investments. The company was struggling in 2014 for the third consecutive year with a decline in adjusted earnings. Cost reductions were implemented and the Executive Board had several actions to accelerate growth. Bwin has presented below average in the past five years but GVC has proven with the takeover of Sportingbet, that it can run an online business successfully. GVC had acquired Sportingbet, a betting company, which is now active in 24 countries, in 2013 for around £ 31.000.000. Sportingbet is now responsible for more than half of the GVC revenue.

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