Talks on possible offer from GVC for mark progress

Online gaming company Digital Entertainment Plc (LON:BPTY), parent of CFD broker InterTrader, has today announced somewhat of a breakthrough in its talks with sports betting and gaming company GVC Holdings PLC (LON:GVC), which could possibly submit a bid for bwin.

In a filing with the London Stock Exchange, said “key aspects of GVC’s proposal have now been addressed to’s satisfaction”.

GVC has earlier this summer emerged as a potential rival bidder for bwin, which still recommends an acquisition offer by 888 Holdings Public Limited Company (LON:888). Under the proposal from 888, bwin’s shareholders will be entitled to 39.45 pence in cash and 0.404 New 888 Shares per each’s share. This translates into a bid of 104.09p per share.

What is interesting in this case is that the rivalry goes beyond apparent financial terms. As a matter of fact, even GVC’s first (non-official) offer, mentioned early in July this year, was more generous, valuing one share in bwin at 110p. The next offer, mentioned in a filing dated July 27, 2015, values one share in bwin at 122.5p.

It is the structure of the offer that is obviously the main point to consider here. The cash component – at up to 25p, is smaller than the one offered by 888. The balance of the value will be paid in new GVC ordinary shares.

Worth noting here is that GVC plans to finance its proposal through a mix of the issuance of new GVC shares and a €400m senior secured loan provided by affiliates of Cerberus Capital Management, L.P. GVC also intends to raise approximately £150 million through an equity placing of new GVC shares for cash in order to fund restructuring costs, the refinancing of existing debt and for additional working capital purposes.

The latest announcement by reiterates that no official bid has been submitted by GVC and that the Board keeps recommending the offer of 888.

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