Sale Of bwin.party Has Been Anything But Easy

Steve Ruddock August 25, 2015

Just several weeks ago the sale of bwin.party to 888 Holdings appeared to be signed, sealed and delivered.

888 Holdings and bwin.party appeared to have reached a preliminary agreement that would see 888 acquire their longtime competitor, despite bwin.party enjoying a slightly larger joint bid from GVC and Amaya.

Since then, things have become measurably more complicated.

Jason Ader upsets the apple cart

The complications began when activist investor Jason Ader, whose SpringOwl investment group owns 6.1% of bwin.party, wasn’t pleased with the final deal with 888 and called on GVC to up their bid… which they did.

With Ader wanting to entertain other offers the sale to 888 has been put on hold while bwin.party contemplated a new GVC bid. The new bid seems serious as well, as GVC has continued talking to bwin.party and has reportedly made another, higher, offer to acquire the company.

Ader’s short, tumultuous history with bwin.party

In October of 2013 two founders of partypoker, Ruth Parasol DeLeon and James Russell DeLeon divested themselves of their equal 7.16% ownerships in bwin.party.

The Parasol/DeLeon shares that have been made available were mainly picked up by SpringOwl in February of 2014 (6.1%), run by investor Jason Ader.

In April of 2014 bwin.party installed Philip Yea as their Chairman, which was followed by Ader publicly criticizing the company and its management team. Ader would later try (and succeed) in placing one person on the company’s board of directors.

“I told Norbert [Teufelberger, chief executive], ‘you’re a lot like Roger Federer. You’re losing tournaments and events you shouldn’t be losing. You’re still Roger Federer but you need a new coach, a new trainer, new rackets, new sneakers, new strings,’ ” Ader said.

And now Ader is unhappy with the 888 deal and wants more for his shares.

Long-standing rumors of a sale

The merger of bwin and Party Gaming in 2011 was supposed to create the industry’s first super-company; a comprehensive online gaming suite that would lead the way for other iGaming companies.

Unfortunately the early expectations never materialized, and in this particular case, the sum appeared to be less than the individual parts, as the newly created bwin.party has struggled to maintain their market share across several verticals, most notably online poker.

Amid these failed expectations, bwin.party has reportedly been entertaining offers for a number of years.

In November of 2014 it was PlayTech and Amaya Gaming that were reportedly trying to acquire the company. At the time bwin.party denied these rumors and the company later reiterated they would not sell or breakup the company’s assets, but did confirm they were in preliminary talks with other companies on “growth opportunities.”
On June 22, 2015 the company did sell off one key asset, when Hong Kong based social gaming company OurGame purchases the World Poker Tour from bwin.party. The deal saw OurGame acquire the WPT and all its assets for $35 million.
The most recent sale rumors started heating up in March of 2015. Among the companies thought to be pursuing bwin.party were William Hill, 888 Holdings, Amaya Gaming, and GVC Holdings.

In the end it will apparently be 888 or GVC that land the remainder of bwin.party.

GVC/Amaya and 888 emerge as prime candidates

The choice between GVC and 888 is an interesting one for bwin.party.

While GVC has made the larger offer there are apparently some serious risks with their bid’s ability to secure outside investment, whereas 888, with a similar suite of products, presents less risk for investors.

This dynamic makes it more likely the GVC deal could fall apart, leaving bwin.party in a position of weakness, and likely crawling back to 888.

888 the better option?

The industry would also like to see bwin.party and 888 merge, as it would create a company with the potential to compete with PokerStars, who currently rules the online poker roost.

If 888 were to acquire bwin.party the company would have a near monopoly on online poker in the United States, which could allow them to fend off PokerStars when they enter the U.S. market, assuming Borgata continues their current arrangement with bwin.party following the sale and leaves PartyPoker NJ intact.

If GVC lands bwin.party PokerStars would be competing against two lesser entities in New Jersey’s online poker market (and similar markets), instead of a single strong competitor, allowing PokerStars to suppress both of its weaker competitors.