GVC Holdings, the company that owns Sportingbet, announced today that it had made a bid to acquire its larger rival, bwin.party, for an undisclosed sum.
Should the sale go ahead, GVC said it would be a reverse takeover, as bwin.party’s market value, currently around $1.15 billion, is more than double that of GVC.
However, GVC is expanding rapidly, while bwin.party has reported stuttering performances over the last two years.
A trend of consolidation within the European online gambling industry is expected over the next few years, a byproduct of the new 15 percent point of consumption tax in the UK and the change to the European Union rules on the taxation of digital services, both of which will dent operator profits.
Bwin recently said that the new European Union tax rules on digital services alone will cost the company €15 million ($16.9 million) this year.
GVC “Never in Stronger” Position
GVC Chief Executive Kenneth Alexander said in March the company was in talks for possible acquisitions, and that “something like” bwin.party would fit the bill.
Alexander was, at the time, commenting on a record financial year for the group, which reported a net profit of €40.6 million ($53 million) for 2014, including a net gaming revenue increase of 32 per cent to €224.8 million ($255 million).
“GVC,” said Alexander, “has never been in a stronger position and we look forward to 2015 and beyond with confidence.”
GVC acquired Sportingbet in 2013 in what was described as a “transformational deal” for a company on the up.
A Sportingbet and bwin.party merger would not just unite two European sports betting powerhouses, it would also bring together two faded online poker heavyweights, Party Poker and Sportingbet’s Paradise Poker.
Bwin still in Talks
Bwin cautioned today that it was still immersed in negotiations with “a number” of companies, as well as GVC.
“Further to the increase in the Company’s share price earlier today and speculation in the media, the Board of bwin.party reconfirms that it is continuing its discussions with a number of third parties and has received revised proposals (including from GVC Holdings PLC) regarding a variety of possible business combinations,” it stated.
“There can be no guarantee that these discussions will result in any transaction being completed and a further update will be given in due course.”
Rumors have swirled that bwin.party had been looking to sell some or all of its assets since early last summer, something it denied up until last November when an unconfirmed story broke that Amaya was preparing a $1.4 billion takeover.
Playtech, Ladbrokes, Apollo Global Management, which partly owns Caesars entertainment, and William Hill have also been named as possible suitors.