888 confident of winning race to secure Bwin tie-up

888 Holdings: Confident of Bwin.party deal. Picture: Getty Images
888 Holdings: Confident of Bwin.party deal. Picture: Getty Images
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ONLINE gambling firm 888 Holdings has insisted it is best placed to seal a tie-up with FoxyBingo owner Bwin.party amid signs it could be jilted at the altar in favour of a rival £1 billion proposal from GVC.

Brian Mattingley, 888’s executive chairman, insisted its agreement last month to buy Bwin for £898.3 million had a “greater intrinsic value”, with a larger cash element than that in the higher offer from GVC, owner of Sportingbet.

However, he refused to rule out upping the bid should Bwin be lured away by GVC, which has persistently tried to gatecrash the deal – and admitted he was likely to be in for a busy bank holiday weekend as the saga reaches its denouement.

Meanwhile, GVC chief executive Kenneth Alexander said his firm was “determined that GVC will play an important role in the continuing consolidation of the online gaming sector” and expected to update the market soon on talks with Bwin.

The battle comes in the midst of sweeping consolidation in the gambling market, with Ladbrokes merging with Coral and a Paddy Power tie-up with Betfair in the offing.

The developments in the race for Bwin came as 888 reported a 41 per cent slump in half-year profits, hit by tax changes and currency movements. Mattingley faced questions after Bwin this week reported progress on talks with Isle of Man-based GVC and said that 888 “will be given due notice in the event that Bwin.party proposes to recommend an offer from GVC”.

He said the group remained “very confident we will get this transaction over the line” but admitted that “there will always be other options”.

Although Mattingley was not prepared to comment when asked whether 888 could raise its offer, he admitted that he was “not going to have an easy bank holiday weekend”.

Results for 888 showed pre-tax profits of $20m (£13m) for the six months to the end of June, down from $34m a year ago, dented by the $14.4m impact of new online taxes in the UK. It was also hit by $7m of costs linked to the Bwin deal.

Revenues fell 2 per cent to $220m, blamed on new VAT charges and currency changes, but underlying like-for-like revenues grew 9 per cent.

Bwin, which also reported half-year results yesterday, said underlying earnings were up 2 per cent to €47.3m (£34.7m) but said that, had it not been for the impact of new UK online taxes and EU VAT, there would have been a 24 per cent rise.

Total revenue fell 6 per cent to €296.5m on last year, which included the World Cup. This factor also weighed on trading in recent weeks, in which daily net revenue has been down 9 per cent compared to 2014.

It added that while talks with GVC continued, there had been no change to its recommendation for 888’s offer and documents on the offer were to be sent to shareholders shortly.

Meanwhile, GVC reported a 14 per cent rise in underlying first-half earnings to €25.5m. Revenues rose 15 per cent to €120.9m and the group said current trading remained strong even with the absence of the World Cup.