Gala Coral owner backs GVC new bid for bwin.party

Gala Coral owner backs GVC new bid for bwin.party

Monday, July 27, 2015 Totally Gaming

The M&A fever in the gaming industry has been ramped up further by Gala Coral part-owner Cerberus Capital Management backing GVC’s €1.55bn ($1.72bn) new proposal to buy bwin.party.

The GVC offer is around €265m more than 888’s bid that was accepted by bwin.party earlier this month, and comes just three days after Ladbrokes and Gala Coral agreed a merger that would form a new €3.2bn company.

GVC’s new 122.5p per share bid, 12.5p more than their original offer along with Amaya Gaming on July 9, is backed by a €400m secured loan from Cerberus and some €209m through an equity placing of new shares. While bwin.party has been advised of the offer, no formal bid has yet been made.

“If a transaction were to be completed, the GVC Board believes that cost reductions exceeding €135m per annum would be achieved across the enlarged group by the end of 2017,” a GVC spokesman said.

Cerberus, which has total assets of more than €30bn, was part of a consortium of four private equity firms that took over Gala Coral in 2010 after it collapsed under its €3.5bn of net debt.

Bwin.party has issued a statement confirming that it has received a bid, but echoed the words of GVC by stating that there is no certainty that an offer will be made. If it accepts an offer from another party, bwin.party will have to pay a break-up fee of €7.97m to 888.

888 last week offered 18 per cent less than GVC’s new bid, with a 104.9p per share deal worth €1.29bn. While GVC’s bid is significantly more than that offered by 888, analysts are convinced that bwin.party shareholders will fare better in the long run under the latter.

Writing in a note, analysts at Panmure Gordon said: “Whilst we believe the acquisition of Bwin would add value for GVC shareholders, and for Bwin shareholders represents a 12p (10 per cent) premium, in our view over the long term 888 would add more value.”

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