PRTY Partygaming

GVC Holdings PLC said Friday it had clinched a deal to buy online gaming firm Bwin.party digital PLC for 1.12 billion pounds ($1.72 billion), beating rival bidder 888 Holdings PLC to the post.

GVC offered 25 pence a share in cash and 0.231 new GVC shares, in a reverse takeover deal.

Bwin.Party had originally agreed to a cash and share offer from 888 Holdings worth 104.09 pence a share in July, only for that to be countered by GVC in early August.

The latest deal was struck with GVC despite 888 Holdings having made a new merger proposal.

Bwin.party said on Tuesday that it was evaluating the revised 888 Holdings offer, together with GVC's, and would consult with its main shareholders before making a decision.

The fight for bwin.party, best known for online gaming brands such as PartyPoker and Foxy Bingo, is part of broader consolidation in the European gambling sector amid rising taxation and tighter regulation.

A new U.K point of consumption tax came into effect in December and levies a 15% tax on profit made by companies on bets by U.K. consumers. The tax has led to more transparency, giving investors better understanding of the income of online gaming firms, thereby prompting possible M&A activity.

Regulations have also tightened elsewhere in Europe, constraining growth and focusing companies' attention on how to lower costs.

Ireland's Paddy Power PLC and smaller U.K. rival Betfair Group agreed last week to a near $8 billion merger.

Betting and gaming services firm Ladbrokes PLC in July also said it would merge with rival Gala Coral Group Ltd. in a stock deal.

The sector has also seen smaller deals in the works in recent months. Pools and tote betting firm Sportech PLC has confirmed receiving a proposal from a Toronto-listed gaming and software supplier Contagious Gaming Inc. regarding a possible recommended offer for the company. Likewise, newly AIM-listed Stride Gaming PLC acquired InfiApps Ltd., an internationally-focused mobile social gaming firm, for up to $39.2 million, to help push the company's entry into the social gaming segment of online gaming, it said.

Talking about the deal in a conference call, Bwin.party Chairman Philip Yea said after considering the offers from 888 and GVC, Bwin believed GVC's offer terms provided a better headline value, synergies and cost savings. Mr. Yea added that, although the 888 offer was attractive, GVC's offer was more attractive in equity and cash and provided an opportunity for Bwin shareholders to gain from the enlarged group.

Bwin.party intends to recommend that bwin.party shareholders vote in favor of the deal, he added. As a result of the bwin.party board's change in recommendation, the previously agreed proposal with 888 Holdings has been terminated.

The news sent Bwin.party shares up 2%, 888 Holdings lost 5.9% and GVC also lost 2.3% in early trade.

Write to Razak Musah Baba at Razak.Baba@wsj.com

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(END) Dow Jones Newswires

September 04, 2015 05:05 ET (09:05 GMT)

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