August 7, 2015 / 10:37 AM / in 2 years

All in: GVC again raises offer to pry Bwin from 888

(Reuters) - British online gambling company GVC Holdings Plc raised its offer to buy rival Bwin.party Digital Entertainment Plc for a second time in two weeks, hoping to persuade the company to reject 888 Holdings Plc’s offer.

GVC’s latest offer, backed by U.S. private equity firm Cerberus Capital Management, is worth 1.03 billion pounds ($1.6 billion) in cash and stock and is only slightly higher than its previous offer of about 1 billion pounds.

Still, Bwin had accepted 888 Holdings’s 900 million-pound offer, saying GVC’s offer is too complex and has less attractive growth prospects.

Bwin could use GVC’s latest offer to coax a higher offer from 888, said Simon Davies, an analyst with Canaccord Genuity.

“It is at a materially higher rate than the 888 offer so I would expect the (Bwin) board to use this as leverage to see if 888 might be prepared to raise their offer.”

“I think it’s unlikely to be the end of (the bidding war).”

The bidding war for Bwin, which stretches back to mid-May, highlights a move towards industry consolidation to try and offset higher taxes and tighter regulation in Britain.

Bwin has itself struggled with the decline of regulated poker markets in Europe and has had to make cost cuts.

It follows, therefore, that Bwin would also consider cost benefits in evaluating the two offers.

888 has promised cost benefits of at least $70 million per annum by the end of 2018, while GVC has promised benefits of more than $150 million per annum by the end of 2017.

Bwin and GVC said on Friday they were working to evaluate GVC’s offer. GVC expects a reply in 5-10 business days.

888, whose market value is roughly two-thirds of Bwin‘s, was not immediately reachable for a comment. GVC is smaller than both companies.

GVC’s latest offer of 125.5 pence per Bwin share – 25 pence in cash and 0.231 of a new GVC share – is 2.4 percent higher than its July 27 offer. Since, then GVC’s shares have risen about 1.5 percent.

U.S. activist investor Jason Ader, who runs SpringOwl, one of Bwin’s top five shareholders, had said an offer of 135-140 pence per share would entice shareholders to the table.

Bwin shares were down marginally at 117.1 pence at 1339 GMT. GVC’s were flat at 432.5 pence and 888 marginally higher at 170.50 pence.

Editing by Savio D'Souza

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