bwin.party confirms GVC acquisition offer

Online gambling group Bwin.Party Digital Entertainment has released a pre-close trading update (its six-month results are due end August) confirming that it has received an offer of 110p a share in an acquisition bid by rival gambling group GVC Holdings.

The update highlights the following developments:

* Gaming revenue in the three months to 30 June was in-line with expectations; sports turnover was ahead of plan although sports gross win margins were below normalised levels;

* Mobile/touch activity has continued to grow strongly: in June 2015 mobile/touch represented (31 percent) of total gross gaming revenue (June 2014: 23 percent) with sports betting at over 50 percent (June 2014: 37 percent);

* Non-core asset disposals have already realised over Euro 36 million, in-line with a target of Euro 30 million to Euro 50 million;

* New label-led structure is delivering the operational improvements expected and Bwin.Party is on-track to achieve at least Euro 15 million of planned cost savings in 2015;

* Board confirms proposal from GVC Holdings at 110p per share.

Group CEO Norbert Teufelberger said:

“Despite challenging comparatives together with the impact of EU VAT and POC tax, we are pleased with our business performance in the first half. We have completed our new organisational set-up and streamlined our decision-making processes, significantly improving our operational performance.

“Sports volumes are ahead of last year despite the 2014 World Cup, although poor sporting results drove gross win margins lower, holding back revenue performance in the period. Casino betting volumes have also remained strong and in poker we are closing the gap on last year.  Our bingo revenue was in-line with last year but our UK business now attracts the POC tax that was introduced in December 2014.

“We have made good progress on the disposal of our non-core assets with World Poker Tour, Winners and United Games all sold during the second quarter and we have already reached our target range of Euro 30 million to Euro 50 million of disposal proceeds.  As well as generating cash, these disposals are also helping us to reduce the complexity within our business.

“Our shift to a label-led structure is delivering the operational efficiencies we anticipated.”

In related news, GVC Holdings issued a statement Thursday confirming its offer, although not mentioning the involvement of Amaya.

Kenneth Alexander, chief executive of GVC Holdings said: “Any offer made by GVC for bwin.party would include part of the consideration in new GVC shares. Based on our experience with the successful Sportingbet acquisition and restructuring, we believe that the potential combination of GVC and bwin.party would result in substantial financial and operating synergies and represent an excellent opportunity for both GVC and bwin.party shareholders.”

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