Sportingbet’s $297m Buyout of Paradise Poker

Sportingbet Paradise Poker Merger

Online poker gaming was a small player in the growing internet gambling market in 2004 until the purchase of Paradise Poker by Sportingbet. The deal brought to the business world’s attention just how big online poker had become and could become.

Sportingbet paid an initial $297m, approximately £169m based on currency valuation on the day of the purchase. It gave the founders of Paradise Poker an enormous return after just five years since the website was founded. The company raised the funds partly by negotiating a £90m deal with Barclays released shares to the value of £11.4m.

The anonymous trio, believed to be computer engineers from Canada, have always maintained their anonymity but were reported to have received a cash sum of £105m, a further £48.6m from share placing with the remainder coming in the value of shares in Sportingbet.

In 2006, they earnt a further £20m between them after Paradise recorded an operating profit of $150m over the following three years – the clause had been built into the contract. This was to be expected, as the acquisition of Paradise Poker by Sportingbet doubled the size of the company. It was a great deal all round as it was over seven times the annual profit of the company being bought out; Paradise Poker had a 10% share in the online poker market with good cash flow, and operating and profit margins.

Nigel Payne, CEO of Sportingbet commented at the time that 2004 was a great year for poker, trebling in the 12 months up to the purchase but admitted that online poker still had a long way to go. Not only was Sportingbet able to introduce poker to its own customers, but extend the benefits to customers of Paradise Poker to engage with online betting.

The growth in the early part of the last decade grew in the US thanks to greater awareness provided by televised events and the inclusion of celebrity poker players such as Ben Affleck and Nicole Kidman. In more recent years, Matt Damon has also taken part in live celebrity tournaments.

Some 80% of players on the Paradise Poker website in 2004 were American even though Paradise Poker was not registered in the US and had no legal assets (registered in Costa Rica but its server is based on a reservation in Montreal); this way, it could get around what was then stringent rules of The Wire Act. This law forbade gambling across state lines. In 2011, the provision of the law was defined as referring to online betting only. Mr Payne believed at the time that the company was not breaking any rules.

Intertain Finalises Vera and John Purchase

Intertain VeraJohn Merger

Intertain finished 2014 having successfully negotiated several expansions. Earlier in 2014 they bought Amaya Gaming Group which was quickly followed up by the purchase of bingo website owner Mandalay Media. Finally, they snapped up Dumarca Holdings plc, a company based in Malta that owned rival online site Vera&John Group.

The transaction gave Intertain greater access to the Nordic market, including the growing number of players there.

Intertain, which is based in Toronto, agreed to pay a cash sum of $54.5m (US) to exclude working capital adjustments and some five million shares in the parent company. There remains the possibility that Intertain will have to pay out more cash if Vera&John generate pre-EBITDA earnings in 2015 through to the end of 2016 that exceeds a certain threshold.

In early 2014, Intertain went public following the purchase of InterCasino from Amaya Gaming Group Inc. In June that year, they expanded again when they acquired Mandalay Media Ltd for $100.4 million, a British online bingo company.

Intertain first announced the deal to buy Dumarca in October 2014.

Dumarca Bought Out by Intertain: £82m

VeraJohn Intertain Merger

In October 2014, the stocks of Intertain Group (TSE:IT), parent company of an online gaming site, rose after announcing the acquisition of Dumarca Holdings Ltd – founder of Vera&John group, another online gambling / gaming company.

On the day of the announcement, share price of Intertain Group rose by 3.1% percent to $12 (CAD) at just after 3PM in Toronto.

According to a source at Intertain, the purchase will cost the company $126.1m (US) with an initial €44.5 million euro payment (cash) and €36.5m worth of shares made available. The value of the final payment will depend on milestones relating to the value of EBITDA generated by Vera&John.

CEO of Intertain John Kennedy FitzGerald stated that Vera&John would give the company access to the Nordic market and immediate cash flow. Furthermore, they would also be able to use Vera&John’s software platform, which includes a mobile package, adding flexibility and allowing expansion over the coming years.

In 2013, Vera&John had revenue of €25.9 million, generating €4.6 million of EBITDA. This was an increase of 124% over their reported top line of €11.6 million for 2012. Vera&John generates 75% of its sales in the Nordic region, its strongest market.

£1.13 Billion Deal For PartyGaming To Control Bwin

Partygaming Bwin.party Merger

In a reverse takeover in 2010, PartyGaming Plc acquired Bwin Interactive for a reported £1.13 billion pounds (approximately $1.76 billion US). The merger created the world’s largest online gambling company that is presently trading publicly.

The merged company upon its creation was 51.6% owned by Bwin with the remaining 48.4% owned by PartyGaming. The combined sites reported net sales of €682million. Following the merger, the new business listed in London and was expected to dominate the online market for sports betting, casino and poker.

Gianmarco Bonacina, a Milan-based analyst with Equita SIM SpA stated that it was viewed as both an offensive and defensive move, pointing out that that Bwin and PartyGaming were losing their share of the European market to Pokerstars and Fulltilt. Merger meant consolidation – a defensive move. Yet the USA it was a different matter – the combined companies wanted to break into North America and the merger put them in a better position.

There has been increased pressure in recent year in the online market. EU and US governments relaxed control of online gaming sites operating outside of their own borders, leading to greater competition for lucrative domestic markets making what was once illegal legal for the purpose of regulation and taxation.

Following the announcement, shares in PartyGaming rose 20%, which was the largest rise since December 2008, closing in London at 309.5 pence at 4:30pm. Bwin also had its largest increase in many years – the biggest since March 2000 saw an 18% rise, closing in Vienna at €42 euros at 5:30.

Opening in the Market

“Offshore” gambling markets where companies provide gambling services to customers in countries where gambling is banned, reported a 10-fold expansion between 2003 and 2010 – rising to €6.5 billion. These figures were released by a consultancy firm in Manchester, England named H2 Gambling Capital.

Countries that have relaxed and revised their rules regarding online gambling include Italy, France, Spain, Denmark and Ireland in Europe, and the USA and Canada in North America.

PartyGaming CEO Jim Ryan was pleased with the merger, stating that it would make the company a leader in the markets that are set to open to them.

AS part of the merger, people who owned shares in Bwin received 12.23 PartyGaming shares for each Bwin share. The transaction cost £1.13 billion based on PartyGaming’s closing share price of 257p on the day of the merger.

The deal granted Bwin shareholders the majority stake in the new company but it also transfers all liabilities and assets of the Austrian company to PartyGaming. A joint stock company was formed of the two companies in Gibraltar, which will be a reverse takeover.

Board In Favour

Both boards unanimously pressed shareholders to vote for the deal, pointing out that the mega-merger will offer superior economies of scale from a marketing perspective with marketing known to be the largest single cost of online gambling sites.

Both Bwin and PartyGaming held shareholder meetings in the first quarter of the 2010 financial year and the merger completed shortly after. Following, the merged name of Bwin.Party registered on the London market.

Some 28.5% of PartyGaming’s share owners supported the move, the equivalent figure for Bwin was 14.4%. Chairman of Bwin’s supervisory board Hannes Androsch favoured the deal despite owning under 10% of Bwin and receiving less than 5% following the merger.

Structural Changes for Greater Profit

Bwin’s co CEOs Ryan and Norbert Teufelberger became co-CEOs of the new company. Manfred Bodner became a non-executive director. The merger expected to “significantly” enhance their revenue over the coming years and cut costs annually by approximately €55million.

888 Holdings Buys bwin.party, Outbidding Amaya for £900m

888 Holdings Bwin.party Merger

Much to the shock of many observers, 888 Holdings announced in mid-July that it had bought bwin.party, the online gaming operator that had been negotiating with another party since November, for over £900m.

Bwin.party had largely been expected to merge with Amaya (the owner of PokerStars) following months of negotiation. 888holdings spokesperson Itai Freiberger announced the historic moment for both companies, noting that it would create a powerful brand for online gaming in terms of potential growth, technology, and integration of their platforms, including benefits for players of the merger.

888 Holdings were not expected to close the deal, but be the runner up in the bid that saw a joint bid from GVC Holdings and Amaya Gaming as early favourites.

£650m Projected Revenue & Expansion of European Market

When complete, it will make 888 a powerful brand and one of the largest companies in the world of gaming, for online poker in particular. It has been estimated that their combined revenue would total up to $1b US per year (Approximately £650m) – a figure quoted by Executive Chairperson Brian Mattingly.

The move will further consolidates the position of 888 group in the USA, assuming control of all legally registered poker sites in the USA – all of which are based in Delaware and Nevada.

Furthermore, the deal grants 888 holdings access to poker players in France and Italy, and will follow up with expansion into Spain, dominating the European market. It is believe that the combined player base numbers over 3,300 but will climb as the brand consolidates its position.

Amaya and GVC Announce $1.4B Offer to Buy Bwin.Party

Amaya Bwin.party Merger

On 7th July 2015 it was revealed by Financial Times that Amaya Gaming who are the parent company of both Full Tilt and PokerStars, bid £900 million bid to buy bwin.party – a move predicted by PokerNews in mid-May. Amaya announced that they were to join forces with sports betting and gaming site GVC Holdings. The latter is the parent company of Betboo, CasinoClub and Sportingbet.

A spokesperson from GVC explained to The Daily Telegraph that discussions were ongoing and that they could not comment on any details at present. Bwin.party was not available for comment.

Negotiations are said to have been under way since approximately November 2014, which was when FT reporters Bryce Elder and Paul Murphy announced that there were advanced negotiations between bwin.party and another party; details would be revealed later.

Shortly after this information was made public by Financial Times, there came confirmation from bwin.party. Commenting on the speculation regarding the future of bwin.party, the stated that preliminary discussions were under way with several interested parties and would take a decision based on what would be best for shareholders.

If the bid is successful, it will allow Amaya to break into the US market for online poker, becoming a giant in sports betting.

The expected acquisition will stop negotiations between bwin.party and 888holdings. Keeping options open, it is understood, but not yet confirmed, that the web giant who owns a number of successful online gaming and gambling ventures were also in negotiations to buy out bwin.party.

There was no discernible impact on the markets following the announcement; both bidders closed in the red at the close of trade on the day.

Amaya has been listed on both Toronto Stock Exchange and Nasdaq since 8th June closed the session on 7th July with stocks going dropping by 0.6% percent and 1.99% respectively. GVC Holdings fared a little worse; their stock dropped at the London Stock Exchange by 3.56 points in early trading on 8th July.

GVC’s drop was not solely down to this announcement; problems with the European markets fuelled by the Greek financial crisis was a factor, as was the crash of China’s stock market. Both concerns for international investors. Bwin.party also fared poorly at the LSE on Wednesday; share value dropped by 3.43 percent by 12:30.

Though the market has not yet responded well, industry analysts believe the takeover could be largely a positive one; it should also be noted that both Amaya and bwin.party are holding well.