The online gaming market got much more interesting last week when the board of directors at bwin.party issued a statement to the London Stock Exchange confirming that discussions are underway for a possible and much-rumored takeover bid for the online gambling company.
“Further to recent media speculation regarding a possible bid for bwin.party, the board of bwin.party confirms that it has entered into preliminary discussions with a number of interested parties regarding a variety of potential business combinations with a view to creating additional value for bwin.party shareholders,” the statement read.
“Such discussions may or may not result in an offer being made for the company,” the statement said. “However, as all such discussions remain at a preliminary stage, there can be no certainty as to whether or not they will result in any form of transaction with any party.”
Amaya Gaming Group—which now owns PokerStars—is one of the interested parties according to reports. According to an article in the Financial Times Alphaville, the potential price for bwin.party would be 145p per share, valuing the company at around £1.19 billion.
Other reports say the potential buyer may be online gaming technology provider Playtech, which has already announced a convertible bond issue for a €315 million war chest for acquisitions and “organic opportunities.”
Bwin.party officials have not said who the talks are with, but the release of the statement spurred an 11 percent increase in the company’s stocks.
At one time, PartyPoker, the predecessor to bwin.party, was the dominant player in the online poker market, eclipsing even PokerStars.
Bwin.party has suffered significant drops in revenue since bwin and PartyGaming, the parent company of PartyPoker, merged in 2011 to create what was for a time the largest listed iGaming company in the world. But the company lost its edge in online gaming when it pulled out of the U.S. market following the passage of the Unlawful Internet Gaming Enforcement Act of 2006.
PokerStars, on the other hand, did not withdraw and was fined more than $700 million to avoid prosecution. PokerStars is now on the verge of licensure in New Jersey now that the previous owners have sold out to Amaya. But an expected launch by the end of the year is now in doubt, although most believe it’s just a matter of time before PokerStars launches in New Jersey under the license of its partner, Resorts Atlantic City.
The possible sale of bwin.party has been spurred by investor activist Jason Ader, who was instrumental in moving slot giant IGT toward its recent sale to GTECH. Ader forced bwin.party to add one of his representatives to its board, while dropping several longtime board members. Ader has been proven to be a shareholder advocate who unlocks the value of struggling companies.
A purchase by Amaya would consolidate the two most powerful online poker brands under on umbrella. The growth of Amaya has been nothing but astounding for a small Montreal technology company to one of the giants of the iGaming industry, even without a bwin.party purchase.
If Playtech wins the auction, licensing could be a bit more problematic. While bwin.party is licensed in New Jersey, it has yet to obtain a license in Nevada. Playtech has yet to enter the U.S. market. Sources tell GGB News that the company is reluctant to cut ties with “grey-listed” companies that operate on the edge of legality in some jurisdictions, but provide the company with a significant portion of its revenue.
