Brinkmanship surfaces in bwin.party takeover battle

The bidding war for a controlling interest in online gambling group Bwin.Party has been in progress since late last year but appears to be reaching a peak as spokesmen for the various interests involved use the UK media to apply strategic pressure.

Spokesmen from the bidding companies – 888 Holdings and GVC- Cerberus Capital Management – have used the media to point out the advantages and disadvantages of their own and competing offers, whilst savvy Wall Street activist investor in Bwin.Party, Jason Ader, has extolled the higher value of the company relative to the bids.

This weekend GVC again took the initiative, with an insider warning Financial Mail journalist Sarah Bridge that the company was prepared to walk away from its GBP 1.1 billion latest bid “…if the [Bwin] board continues to recommend an offer from arch rival 888 Holdings.”

Bridge reported that sources close to GVC say it will increase its cash-and-shares offer for Bwin if 888 Holdings raises its own bid, but if 888 does not lift its offer but still remains the recommended bidder then GVC reserves the right to withdraw its proposal – currently of 130p a share and valued at around GBP 1.1 billion .

“Bwin has played a clever game of poker here by keeping both parties interested,” the source told Bridge. “But we are considering all options, including walking away.”

Despite the media manoeuvring, analysts believe that the bidding war will see more offers.

Meanwhile, Bwin’s board have the task of comparing the merits of a takeover by either 888 Holdings or GVC. The latter is perceived to have greater experience in the fast growing and profitable online sports betting sector, and there are advantages to its plan to introduce cost-saving synergies in the event of a successful takeover.

888, on the other hand, has a reputation for innovation and capability in the wider online gambling market…and it is more appealingly listed on London’s main stock exchange rather than the AIM.

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