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GVC Holdings Rejects Offers For Bwin Assets and GVC Holdings


  • GVC Holdings has had inquiries for a number of's assets despite not yet completing the takeover.

  • shareholders yet to vote for the GVC Holdings takeover.

  • Analysts question the expensive €400 million loan being used to help finance the takeover.

GVC Holdings’ £1.1 billion cash plus shares takeover of entertainment plc is yet to be approved by shareholders, but the company has already turned down several offers for some of’s assets, according to an article in the Daily Telegraph.

Kenny Alexander, the chief executive of GVC, revealed the company had received enquiries about the availability of Cashcade, the online gambling marketing company that owns, among other brands, the online casino and websites, bwin’s Kalixa payments processing business and its US-facing business.

However, Alexander stated that none of these discussions progressed beyond a preliminary stage as his focus is on completing the takeover before integrating and GVC before attempting to halt the decline in revenue of before he even considers disposing of any assets.

Expensive loan to finance takeover

Once the reverse takeover is complete, Alternative Investment Market (AIM)-listed GVC will become a FTSE250 company. Analysts, however, have questioned the deal due to the expensive loan from Cerberus being used to help finance the deal.

The €400 million Cerberus Loan carries a high-interest rate of EURIBOR plus an additional 11.5% for two years, which will cannibalise the company’s earnings during that period, which could lead to substantial job losses and could be one of the reasons that the vultures are circling looking to pick off assets.

If the name Cerberus is ringing bells inside your head, it is because it is among the private-equity owners of Gala Coral which is currently undergoing a £2.3 billion merger with bookmaking giant Ladbrokes.

Some industry experts have questioned the reasoning behind accepting the GVC offer over the one 888 Holdings put on the table. Indeed, even SpringOwl investor Jason Ader, who holds a 5.02% interest in stated that 888 would “realise significant long-term synergy value for our shareholders with the least amount of execution and regulatory risk.”

Is the GVC deal the best for the longevity of the companies?

Both and GVC specialise in sports betting and have seen casino and poker revenues continually slide in recent times whereas the same areas of 888’s business flourish.

Perhaps more surprising for shareholders is a reported 90% of GVC’s revenue comes from unregulated markets such as Germany, Brazil and Turkey. In July 2015, when looked set to accept the 888 deal over the one from GVC, Morgan Stanley analyst Matt Smith said: “We think 888’s stock should be more attractive to Bwin shareholders given GVC’s higher mix of unregulated markets and 888’s larger potential for synergies.” shareholders have been urged to vote in favour of the GVC deal. As reported on PokerNews in September 2015, Chairman Philip Yea, said:

“In recommending the Offer from GVC, the Board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group's growth strategy in an increasingly competitive marketplace.”

“As a result of these and other factors, including the proven track record of GVC's management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the Board has withdrawn its recommendation for the 888 offer and is now advising shareholders to vote in favour of the Offer from GVC.”

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