The boards of 888 and bwin.party are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which Offeror will acquire the entire issued and to be issued ordinary share capital of bwin.party. Offeror has been newly incorporated in Gibraltar for the purposes of the Offer. It is proposed that the Offer will be effected by means of a scheme of arrangement of bwin.party under Part VIII of the Gibraltar Companies Act.
· Under the terms of the Offer, bwin.party Shareholders will be entitled to receive:
For each bwin.party Share: 39.45 pence in cash
and
0.404 New 888 Shares
· Based on the closing price of 160.00 pence per 888 Share on 16 July 2015 (being the last practicable date prior to the release of this announcement), the Offer represents:
o a value of approximately 104.09 pence per bwin.party Share;
o a premium of approximately 16.4 per cent. to the closing price per bwin.party Share of 89.40 pence on 14 May 2015 (being the last Business Day prior to bwin.party’s announcement on 15 May 2015 in relation to its discussions with third parties regarding a variety of possible business combinations);
o a premium of approximately 24.1 per cent. to the volume weighted average closing price per bwin.party Share of 83.87 pence in the last three months prior to 14 May 2015; and
o a value of approximately £898.3 million for bwin.party’s entire issued and to be issued share capital.
· The Offer will include a Mix and Match Facility, so that bwin.party Shareholders will be able to elect to vary the proportions of cash and New 888 Shares they receive, subject to offsetting elections made by other bwin.party Shareholders. The Mix and Match Facility will not change the total number of New 888 Shares to be issued by 888 or the total cash consideration to be paid to bwin.party Shareholders pursuant to the Offer.
· 888 is one of the world’s most popular online gaming entertainment and solutions providers, offering casino, poker, bingo and sports betting products and is ranked second in global poker liquidity. 888 is traded on the London Stock Exchange with a premium listing and is incorporated and headquartered in Gibraltar. As of close of trading at the last practicable date prior to the release of this announcement, 888 had a market capitalisation of approximately £570.8 million.
· The 888 Board and the bwin.party Board believe the Offer represents a transformational opportunity for both 888 and bwin.party and offers the potential to enhance shareholder value. By combining the complementary businesses of 888 and bwin.party, the 888 Board and the bwin.party Board anticipate that the Enlarged Group will benefit from significantly enhanced scale, an enhanced product offering and significant cost and revenue synergies. It is expected that such cost synergies will amount to not less than US$70 million per annum (before tax) by the end of the 2018 financial year. To the extent the Studios strategy described below is approved and ultimately implemented by the 888 Board, it will reduce some of the identified cost synergies. However, the 888 Board will only implement the Studios strategy if any shortfall in the synergies would be more than offset by the revenues gained and the value opportunity created.
· The acquisition of bwin.party by Offeror is expected to be earnings enhancing for 888 (excluding one-off costs) in the first full financial year of ownership.[1]
· The bwin.party Board and 888 Board have also identified a number of strategic options to be considered in respect of the business and operations of the Enlarged Group. One of these opportunities is to create potential additional value for the Enlarged Group’s shareholders by building the bwin.party technology business called “Studios”. Subject to the 888 Board determining both that Studios has acquired the requisite critical mass as well as presenting an attractive business case, the Enlarged Group’s strategy would include establishing the Studios B2B business as a stand-alone business and potentially spinning it off into a separate listed vehicle (its shares being distributed to the then existing 888 Shareholders), once appropriate service level agreements with the rest of the Enlarged Group have been finalised and the integration of the Enlarged Group’s B2C businesses completed.
· It is proposed that Liz Catchpole, a bwin.party independent non-executive director and Chair of the bwin.party Audit & Risk Committee, and Martin Weigold, bwin.party’s Chief Financial Officer, will join the 888 Board as an independent non-executive director and a non-executive director, respectively, on Completion. In addition, it is proposed that Norbert Teufelberger, bwin.party’s Chief Executive Officer, who has 15 years’ experience of running an online sports book, will, under the terms of an agreement to be agreed with 888, provide consultancy services as and when required by the 888 Board with regard to the Enlarged Group’s sports-betting offering.
· The cash consideration payable by Offeror under the terms of the Offer will be financed through a new US$600 million term loan credit facility.
· Following completion of the Offer, bwin.party Shareholders will own approximately 48.9 per cent. of the issued ordinary share capital of the Enlarged Group.
· The bwin.party Directors, who have been so advised by Deutsche Bank, consider the terms of the Offer to be fair and reasonable. In providing advice to the bwin.party Directors, Deutsche Bank has taken into account the commercial assessments of the bwin.party Directors.
· Accordingly, the bwin.party Directors intend unanimously to recommend that bwin.party Shareholders vote in favour of the Scheme at the Court Meeting and each of the resolutions to be proposed at the General Meeting as the bwin.party Directors have irrevocably undertaken to do, or procure to be done, in respect of their own beneficial holdings of 14,388,127 bwin.party Shares representing, in aggregate, approximately 1.7 per cent. of the ordinary share capital of bwin.party in issue on 16 July 2015 (being the last practicable date prior to the release of this announcement). Further details of these irrevocable undertakings are set out in Appendix III to this announcement.
· The Offer will be put to bwin.party Shareholders at the Court Meeting and at the General Meeting. In order to become effective, the Scheme must be approved by a majority in number of the Scheme Shareholders voting at the Court Meeting, either in person or by proxy, representing at least three-quarters in value of the Scheme Shares voted at the Court Meeting. In addition, special resolutions implementing the Scheme and approving the related Capital Reduction must be passed by bwin.party Shareholders representing at least three-quarters of votes cast at the General Meeting.
· In addition to the irrevocable undertakings received from the bwin.party Directors, 888 and Offeror have received letters of intent to vote in favour of the Scheme at the Court Meeting and each of the resolutions to be proposed at the General Meeting from certain other bwin.party Shareholders in respect of an aggregate of 90,060,415 bwin.party Shares representing, in aggregate, approximately 10.9 per cent. of the ordinary share capital of bwin.party in issue on 16 July 2015 (being the last practicable date prior to the release of this announcement). Further details of these letters of intent are set out in Appendix III to this announcement.
· In total, therefore, 888 and Offeror have received either irrevocable undertakings or letters of intent to vote in favour of the Scheme at the Court Meeting and each of the resolutions to be proposed at the General Meeting over, in aggregate, 104,448,542 bwin.party Shares, representing approximately 12.7 per cent. of the ordinary share capital of bwin.party in issue on 16 July 2015 (being the last practicable date prior to the release of this announcement).
· The Offer will be put to the vote of existing 888 Shareholders as a class 1 transaction for the purpose of the UK Listing Rules.
· The 888 Directors consider the Offer to be in the best interests of 888 and the 888 Shareholders as a whole and intend unanimously to recommend that 888 Shareholders vote in favour of each of the resolutions to be proposed at the 888 General Meeting which will be convened in connection with the Offer as the 888 Directors have irrevocably undertaken to do, or procure to be done, in respect of their own beneficial holdings of 1,638,471 888 Shares representing, in aggregate, approximately 0.5 per cent. of the ordinary share capital of 888 in issue on 16 July 2015 (being the last practicable date prior to the release of this announcement).
· In addition to the irrevocable undertakings received from the 888 Directors, Offeror has received irrevocable undertakings from certain 888 Shareholders representing, in aggregate, approximately 58.8 per cent. of the ordinary share capital of 888 in issue on 16 July 2015 (being the last practicable date prior to the release of this announcement), to vote in favour of all the resolutions to be proposed at the 888 General Meeting.
· The 888 Directors have received financial advice from Investec Bank plc and Stifel, Nicolaus & Company, Incorporated in relation to the Offer. In providing their advice to the 888 Directors, Investec Bank plc and Stifel, Nicolaus & Company, Incorporated have relied upon the commercial assessments of the Offer of the 888 Directors.
· The Offer is subject to the Conditions and further terms set out in Appendix I to this announcement including the sanction of the Scheme by the Court, the satisfaction of certain regulatory conditions, approval of the Offer and certain matters in connection therewith by 888 Shareholders and Admission to Trading of the New 888 Shares.
· bwin.party, Offeror and 888 have entered into the Co-operation Agreement in relation to the Offer pursuant to which, among other things, a break payment may be payable by Offeror or bwin.party if the Offer lapses in certain circumstances. Further details are set out in paragraph 20 of this announcement.
· The Scheme Document, containing further information about the Offer, notices convening the Court Meeting and the General Meeting and the expected timetable, will be made available by 888 on its website at www.888holdingsplc.com and by bwin.party on its website at www.bwinparty.com as soon as practicable.
· The Prospectus, containing information about the New 888 Shares and the Enlarged Group, is expected to be published by 888 at the same time as the Scheme Document is sent to bwin.party Shareholders. The Prospectus will be made available by 888 on the 888 website at www.888holdingsplc.com. It is also expected that the 888 Class 1 Circular, containing details of the Offer and notice of the 888 General Meeting at which resolutions will be proposed for the approval of the Offer by 888 Shareholders, will be posted to 888 Shareholders at the same time as the Scheme Document is posted to bwin.party Shareholders.
· It is currently expected that the Scheme Document, the Prospectus and the 888 Class 1 Circular will be posted by the end of August 2015.
· It is currently expected that the Scheme will become effective by the end of Q4 in 2015 or in the early part of Q1 in 2016, subject to the satisfaction or waiver of the Conditions and certain further terms set out in Appendix I to this announcement.
· Allen & Overy LLP is acting as legal adviser to 888 and Freshfields Bruckhaus Deringer LLP is acting as legal adviser to bwin.party.
Commenting on the Offer, Brian Mattingley, Executive Chairman of 888, said:
“This is a transformational opportunity for 888 in the consolidating online gaming industry, which is expected to grow significantly over the coming years. The Enlarged Group will benefit from significantly enhanced scale, an improved product offering as well as significant cost and revenue synergies. It delivers a substantial premium to bwin.party Shareholders whilst also giving them the opportunity to participate in this value creation opportunity. 888’s management have a well-established track record of delivering outperformance since 2011 and we look forward to working with our new colleagues to create a global leader.”
Commenting on the Offer, Philip Yea, Chairman of bwin.party, said:
“A year ago we set out to explore industry consolidation opportunities whilst working to improve our core business. We have made substantial progress on both counts and our announcement today marks the first step in a new phase in our short history. Bringing our two groups together will generate substantial financial synergies for the benefit of both sets of shareholders and create a strong player with the breadth of product, brands and geographic coverage to grow faster than either business would be able to achieve stand-alone. Drawing upon a wealth of experience accumulated over the past few years, our management team looks forward to working with new colleagues to realise the considerable potential that this business combination presents.”
Leave a Reply
You must be logged in to post a comment.