GBP 1.1 BN DEAL - Recommended offer for bwin.party digital entertainment plc by GVC Holdings plc
Summary
· The boards of GVC and bwin.party are pleased to announce that they have reached agreement on the terms of a recommended offer pursuant to which GVC will acquire the entire issued and to be issued ordinary share capital of bwin.party. The Offer is intended to be effected by means of a scheme of arrangement of bwin.party under Part VIII of the Gibraltar Companies Act.
· Under the terms of the Offer, bwin.party Shareholders will be entitled to receive:
For each bwin.party Share: 25 pence in cash and 0.231 New GVC Shares
The Offer represents a value of approximately 129.64 pence per bwin.party Share based on the closing price per GVC Share at the close of business on 3 September 2015 (being the latest practicable date prior to publication of this announcement). On this basis, the Offer values the entire issued and to be issued ordinary share capital of bwin.party on a fully diluted basis at approximately £1.116 billion.
Based on the offer value of 129.64 pence per bwin.party Share, the Offer represents a premium of approximately:
· 12.5 per cent. to the closing price per bwin.party Share of 115.20 pence on 3 September 2015 (being the last business day before the date of this announcement);
· 45.0 per cent. to the closing price per bwin.party Share of 89.40 pence on 14 May 2015 (being the last business day before the date of the announcement by bwin.party on 15 May 2015 that it had received proposals (including from GVC) regarding a variety of possible business combinations);
· 54.6 per cent. to the volume weighted average closing price per bwin.party Share of 83.87 pence in the three months prior to the announcement by bwin.party on 15 May 2015 referred to above;
· 23.6 per cent. to the implied value of the previously announced offer for bwin.party made by 888 on 17 July 2015, based on the closing price per 888 share of 162.00 pence on 3 September 2015 (being the last business day before the date of this announcement); and
· 12.9 per cent. to the implied value of 888's revised proposal to its offer for bwin.party (details of which are set out in paragraph 8 below of this announcement) based on the closing price per 888 share of 162.00 pence on 3 September 2015 (being the last business day before the date of this announcement).
· The bwin.party Shareholders as at the record date for the bwin.party Permitted Dividend will be entitled to receive and retain the bwin.party Permitted Dividend.
· The Offer will include a Mix and Match Facility, so that bwin.party Shareholders will be able to elect to vary the proportions of cash and New GVC Shares they receive, subject to the elections made by other bwin.party Shareholders. The Mix and Match Facility will not change the total number of New GVC Shares to be issued by GVC or the total cash consideration to be paid pursuant to the Offer.
· GVC Shares are currently admitted to trading on AIM. Application will be made to the UKLA for the GVC Shares together with the New GVC Shares to be issued pursuant to the Offer and the Fundraising to be admitted to the Standard Segment of the Official List and to trading on the Main Market of the London Stock Exchange on Completion. Completion of the Offer is conditional on, among other things (i) admission of the GVC Shares and the New GVC Shares to the Standard Segment of the Official List and to trading on the Main Market of the London Stock Exchange or (ii) in the alternative, admission to trading on AIM.
· Once GVC Shares together with the New GVC Shares are admitted to the Standard Segment of the Official List and to trading on the Main Market of the London Stock Exchange, GVC intends to make an application to the UKLA to transfer the GVC Shares and the New GVC Shares from the Standard Segment of the Official List to the Premium Segment of the Official List as soon as practicable following publication of the GVC Report and Accounts for the year ending 31 December 2015.
· The cash consideration payable under the Offer will be funded by up to €400.0 million (approximately £291.3 million) of senior secured debt provided by Cerberus. In addition GVC proposes to raise approximately £150.0 million (approximately €206.0 million) by way of a placing of New GVC Shares to institutional investors, and a subscription of New GVC Shares by certain investors, under the Fundraising. Certain GVC Directors will also participate in the Fundraising. The net proceeds of the Fundraising will be used by GVC, amongst other things, to fund reorganisation costs within the Enlarged Group and for general working capital purposes. The proceeds from the Fundraising are not required for, nor will they be used to fund, the cash consideration to be paid pursuant to the Offer.
· Following Completion, bwin.party Shareholders will own approximately 66.6 per cent. of the Enlarged Group and will be able to participate in the future growth prospects of the Enlarged Group.
· The bwin.party Directors, who have been so advised by Deutsche Bank, consider the terms of the Offer to be fair and reasonable. In providing advice to the bwin.party Directors, Deutsche Bank has taken into account the commercial assessments of the bwin.party Directors.
· Accordingly, the bwin.party Directors intend unanimously to recommend that bwin.party Shareholders vote in favour of the Scheme at the Court Meeting and the bwin.party Shareholder Resolution at the bwin.party General Meeting, as the bwin.party Directors have irrevocably undertaken to do in respect of their own beneficial holdings of 14,388,127 bwin.party Shares representing, in aggregate, approximately 1.7 per cent. of the ordinary share capital of bwin.party in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement).
· Furthermore, GVC has received an irrevocable undertaking from Henderson Global Investors and bwin.party has received a commitment fromAndrosch Privatstiftung to provide an irrevocable undertaking in support of the Scheme. This represents an aggregate of 75,108,395 other bwin.party Shares, representing approximately 9.1 per cent. of the share capital of bwin.party in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement).
· Accordingly, GVC has received irrevocable undertakings in support of the Scheme in relation to an aggregate of 89,496,522 bwin.party Shares, representing approximately 10.8 per cent. of the share capital of bwin.party in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement). Further details of these irrevocable undertakings are set out in Appendix III to this announcement.
· The Offer will be put to bwin.party Shareholders at the Court Meeting and at the bwin.party General Meeting. In order to become effective, the Scheme must be approved by a majority in number of the bwin.party Shareholders voting at the Court Meeting, either in person or by proxy, representing at least three-quarters in value of the bwin.party Shares voted at the Court Meeting. In addition, the bwin.party Shareholder Resolution which, among other things, amends the articles of association of bwin.party, must be passed by bwin.party Shareholders at the bwin.party General Meeting.
· The GVC Directors believe the Offer represents a compelling opportunity for shareholders of both GVC and bwin.party to benefit from the significant value opportunity arising from the restructuring and refocusing of bwin.party and the associated restructuring of GVC. Based on their experience on the Sportingbet acquisition (which completed on 19 March 2013) and their knowledge of the bwin.party business, the GVC Directors believe that the proposed acquisition of bwin.party will lead to substantial cost savings for the Enlarged Group, which are expected to be at least €125 million per annum by the end of 2017 as measured against the financial results of GVC and bwin.party for the 12 months ended 31 December 2014.
· GVC is a leading provider of B2B and B2C services to the online gaming and sports betting markets. GVC's B2C offerings target a number of European and Latin American markets and include the Sportingbet business which it acquired in 2013 pursuant to a joint takeover offer with William Hill. GVC's B2B businesses include the third party support contract for East Pioneer Corporation B.V., which acquired the Superbahis brand from Sportingbet on 21 November 2011.
· The Offer is subject to the Conditions and further terms set out in Appendix I to this announcement, including the sanction of the Scheme by the Court, the satisfaction of certain antitrust and regulatory conditions, approval of the GVC Resolutions by the GVC Shareholders at the GVC General Meeting and Admission to Trading of the GVC Shares. Upon the Scheme becoming effective, it will be binding on all Scheme Shareholders, irrespective of whether or not they attended or voted at the Court Meeting or the bwin.party General Meeting and, if they attended and voted, whether or not they voted in favour.
· The Offer, being a transaction of this size, constitutes a "reverse takeover" (as defined in the AIM Rules) for GVC. Accordingly, GVC will be required to seek the approval of GVC Shareholders at the GVC General Meeting for the Offer. The Offer will be conditional upon, amongst other things, the Fundraising becoming unconditional (other than as to Admission and any conditions of the Placing Agreement and Subscription Letters relating to conditions of the Offer that will be satisfied by Admission) and the passing by the requisite majority at the GVC General Meeting of the GVC Resolutions to approve the Offer and the authorities to increase the authorised share capital of GVC and to issue the New GVC Shares pursuant to the Offer and the Fundraising.
· bwin.party and GVC have entered into the GVC Co-operation Agreement in relation to the Offer pursuant to which, among other things, a break payment may be payable by bwin.party and/or GVC if the Offer lapses in certain circumstances. Further details are set out in paragraph 22 of this announcement.
· The GVC Directors intend unanimously to recommend that GVC Shareholders vote in favour of the GVC Resolutions to be proposed at the GVC General Meeting, as the GVC Directors have irrevocably undertaken to do in respect of their controlled holdings of 245,482 GVC Shares, representing in aggregate, approximately 0.4 per cent. of the share capital of GVC in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement).
· Furthermore, GVC has received irrevocable undertakings and a letter of intent from certain other GVC Shareholders to vote in favour of the GVC Resolutions to be proposed at the GVC General Meeting in respect of an aggregate of 14,368,556 GVC Shares, representing approximately 23.4 per cent. of the share capital of GVC in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement).
· Accordingly, GVC has received irrevocable undertakings and a letter of intent to vote in favour of the GVC Resolutions to be proposed at the GVC General Meeting in respect of an aggregate of 14,614,038 GVC Shares, representing approximately 23.8 per cent. of the share capital of GVC in issue on 3 September 2015 (being the latest practicable date prior to the publication of this announcement). Further details of these irrevocable undertakings are set out in Appendix III to this announcement.
· The Scheme Document, containing further information about the Offer and notices convening the Court Meeting and the bwin.party General Meeting, together with the relevant Forms of Proxy and Form of Election will be sent to bwin.party Shareholders in due course and will be made available by GVC on its website at www.gvc-plc.com/html/investor/welcome.asp and by bwin.party on its website at www.bwinparty.com. It is expected that, subject to the satisfaction or (where applicable) waiver of the conditions and certain further terms set out in Appendix I to this announcement and to be set out in the Scheme Document, the Scheme will become effective in late Q4 2015 or in Q1 2016.
· It is expected that the GVC Prospectus, containing information about the GVC Shares (including the New GVC Shares) and the Enlarged Group and a notice convening the GVC General Meeting, will be published at the same time as the Scheme Document is posted to bwin.party Shareholders.
· Norbert Teufelberger, current CEO of bwin.party, will join the board of the Enlarged Group as a non-executive director, ensuring that it has direct access to and can benefit from his intimate knowledge of the activities and operations of the bwin.party business.
· As a result of the bwin.party Board's change in recommendation, the 888 Co-operation Agreement has terminated in accordance with its terms.
Commenting on the Offer, Philip Yea, Chairman of bwin.party, said:
"In recommending the Offer from GVC, the Board has taken into account many factors including, but not limited to, the headline value per share and the consideration being offered, the level, timing and deliverability of the financial synergies to be generated and the enlarged Group's growth strategy in an increasingly competitive marketplace. As a result of these and other factors, including the proven track record of GVC's management team in creating substantial value for shareholders, after a carefully managed and diligent review process, the Board has withdrawn its recommendation for the 888 offer and is now advising bwin.party shareholders to vote in favour of the Offer from GVC."
Commenting on the Offer, Kenneth Alexander, Chief Executive Officer of GVC, said:
"GVC is the natural partner for bwin.party considering our strong sports betting and online gaming pedigree. Sports betting is in our DNA and leveraging GVC's experience of successfully acquiring and restructuring online gaming businesses, notably Sportingbet in 2013, we look forward to merging the two operations to deliver long term value for combined shareholders. GVC has been working closely with bwin.party's management and has identified many talented individuals with whom it looks forward to working to ensure the future success of the enlarged business."
There will be a conference call and presentation for sell-side analysts at 10.00am (BST) today, which will also be made available at http://www.investis-live.com/gvc-holdings/55e862346d72a10b00b4f2ce/ann. The dial-in details for this conference call are as follows:
GVC
This summary should be read in conjunction with, and is subject to, the full text of this announcement (including its Appendices). The Offer will be subject to the Conditions and further terms set out in Appendix I to this announcement and to the full terms and conditions to be set out in the Scheme Document, the Forms of Proxy and the Form of Election.
Appendix II to this announcement contains further details of the sources of information and bases of calculations set out in this announcement. Appendix III contains a summary of the irrevocable undertakings received in relation to the Offer. Appendix IV contains definitions of certain expressions used in this summary and this announcement.