888 Holdings agreed to buy Bwin.party Digital Entertainment for 898.3 million pounds ($1.4 billion) in cash and shares in a deal that will create a real-money online gambling giant.
The deal thwarts a previously announced takeover bid by GVC Holdings and Amaya, even though the 888 offer is actually lower than a 906.5 million pound bid by GVC. The two merging companies said the deal would be simpler given approvals required by regulators and taxation issues. Bwin.party shareholders will own about 48.9 percent of the combined company. Online gambling is estimated to be a $41 billion market in 2015, according to Statista.
Combined revenue for both companies last year would have been about $1.1 billion, 888 said in a statement. The acquisition will also yield cost savings and lead to the creation of a separate firm that it could spin off.
There have been numerous deals in online gambling lately, and some of them may eventually effect the game business. That’s because real-money online gambling companies have created alliances with non-gambling social casino game makers. The social casino game business is in the multiple billions, according to Eilers.
Bwin.party, for instance, had a deal with Zynga. In online gambling, GVC teamed up with William Hill to take over Sportingbet in 2013.
Analyst Adam Krejcik of Eilers Research said that he would be shocked if GVC were still able to interrupt the merger of 888 and Bwin.party. He said the combined companies would be a competitor to Poker Stars, but he noted that PokerStars would still be five times bigger in cash game traffic. He noted that GVC lost out in part because of regulatory concerns.