Bwin.Party Digital Entertainment (BPTY) said in March that several suitors had expressed interest in the online gaming company. Now, gambling peers 888 (888) and GVC (GVC) are facing off to see who can persuade the Bwin board to sell. Neither company revealed the details of their respective bids, but a rise in Bwin's share price prompted them to confirm their offers were on the table. GVC later confirmed it would bid alongside Canadian group Amaya - with the companies co-funding the deal if approved.
Rumours of a bidding war first started to rumble back in March after Bwin posted a disappointing set of full-year results. Around the same time, high-street bookie William Hill (WMH) was licking its wounds after a thwarted attempt to buy 888. Together with the introduction of new, punitive online gambling taxes, it's shaping up to be a year of consolidation for the industry.
For Bwin shareholders, a complete sale is likely to be in their best interests. The group fell significantly into the red in 2014, its revenues have been tracking around 12 per cent behind last year, and its cost base remains under significant pressure. Last year, an impairment charge of nearly €104m (£74m) against intangible assets within poker and social gaming resulted in an operating loss of €98m.
Whether a merger will offer shareholders a premium remains to be seen. But with Bwin's earnings under such pressure, 888 and GVC might try to snag themselves a bargain. The alternative, should Bwin choose to go it alone, could comprise further rounds of cost-cutting and deeper restructuring. In March, Bwin chief executive Norbert Teufelberger said he was keen to give various divisions in Bwin "more autonomy" and direct management.
