Investors back GVC’s hostile bid for gamer Bwin

GVC Holdings, the gaming group trying to crash the £900m merger between rivals Bwin and 888, has secured backing from its investors to make a hostile bid for Bwin.

The firm raised its proposed offer for Bwin for the second time in two weeks yesterday, fuelling deal mania sweeping the sector.

Ladbrokes is expected to unveil further details of a mega-merger with Gala Coral next week, while the UK’s biggest player, William Hill, yesterday ruled itself out of the consolidation wave while unveiling disappointing results.

GVC’s latest offer, for which it has secured full funding, values Bwin (down 0.2p to 116.9p) at around £1.03bn in cash and shares, compared with a cash and shares offer from 888 Holdings that values it at just over £900m.

Bwin’s board has already recommended 888’s lower offer because it said it has less risk, as GVC’s earlier offer involved a partner who has since dropped out. While GVC focuses on persuading Bwin to back it rather than 888, the City institutions GVC has enlisted to fund its deal, and private equity partner Cerberus Capital Management, have signed up to terms allowing a

hostile bid. It is understood that Bwin’s board encouraged GVC, which already owns Sportingbet, to sweeten its terms following its previous offer.

Advisers to GVC are expecting a response by the middle of next week. There is also a possibility 888 may return with a counterbid.

Peel Hunt analyst Nick Batram said: “The key difference is the synergies the bidders are offering.’

GVC believe they can extract nearly double at £95.6m while 888 are offering £45.22m.

‘So it comes down to who Bwin’s shareholders and board believe,’ Batram said. ‘I would want to be convinced that the cost savings are tangible and deliverable and know what the plan is, but GVC’s management have a history of delivering big cost savings.’

William Hill, which reported a 35pc fall in pre-tax profit to £78.7m in the half to June 30, said extra taxes cost it £44m.

It announced a higher dividend of 4.1p and said it had no plans for UK acquisitions. Weakness in the UK market is one of the factors behind the merger of Ladbrokes and Gala Coral. The tie-up will create a £2.3bn gambling giant with net revenues of £2.1bn.