bwin.party targets B2B partners as protracted acquisition talks continue

11th March 2015 7:20 am GMT

bwin.party digital entertainment said Wednesday that it remains in discussions with several parties regarding a variety of potential deals to sell of parts or all of the business, having received a number of proposals.

Alongside publication of its full year 2014 results this morning, the company said it was aware that there had been speculation regarding the status of these discussions in recent weeks. In February the company saw its share price plummet after speculation arose that acquisition talks with an unnamed party had collapsed.

“Together with its advisers, the board has entered a further stage of discussions with each party with a view to assessing the relative attractions of these proposals against the board's objective of creating additional value for shareholders,” said the company in a statement, although it warned that the proposals may or may not result in an offer being made for all or part of the company.

The likes of William Hill, Playtech and Amaya have all been linked with these discussions, although none of the companies have yet to publicly confirm their interest.

Having announced its intention to focus resources on its core real-money gaming business, bwin.party said that it has made good progress since the year-end and expects to realise between €30m and €50m in aggregate from the sale of its other non-core businesses and assets.

Last month, the bwin-party-backed investment vehicle New Game Capital realised its only remaining investment through a placing of a 10.4 per cent stake in Gaming Realms.

New Game Capital is now being wound up and the proceeds distributed to shareholders. As the largest shareholder in the business, the company expects to receive approximately €4.5m.

bwin-party continues to review how value can be maximised for its Kalixa payments business that it says is making “good progress” following the acquisition of PXP in May 2014.

However the company did not issue an update on talks to sell off its social gaming division Win Interactive. The operator is rumoured to be in talks with Rising Tide Games, founded by former 888 and Zynga executive Maytal Olsha, which would see the social casino start-up take charge of Win with bwin.party receiving a stake in the company by way of payment.

Looking ahead to 2015, bwin.party said that it remains focused on maximising both the “accessibility and appeal” of its gaming products and services, and on striving to achieve “operational excellence” in each of its key business units.

It has rationalised its strategic framework to focus its B2C operations on nationally regulated and/or taxed markets, and will look to secure long-term strategic partners for its B2B business, driven by sports betting.

The company will shift away from a product-led approach to what it calls a "label-led" structure for 2015. This shift has allowed bwin.party to remove “several layers” of middle management whilst at the same time increasing accountability for and visibility of projects that now reside within a single label.

Under this approach, bwin labels (including Gamebookers) would have contributed 60 per cent of total revenue (€365.3m) in 2014, followed by Gaming labels (Partycasino, Partypoker, Foxy Bingo and Gioco Digitale) with €196.0m.

The US (including B2C, B2B and the WPT) would have accounted for a further €19.7m, with Studios (technology provided through arms-length B2B agreements) contributing €7.9m, and other (Kalixa, social game, InterTrader and Winners) €23.0m.

"Having announced our shift to a label-led approach in August, we are now accelerating our transformation,” continued Teufelberger. “This programme is already improving our operational effectiveness and customer focus, both of which are key drivers of our long-term financial performance, with particular opportunities flowing from the commercialisation of our technology through our new Studios business unit."

bwin.party said that technology will remain at the heart of this effort as it looks to transform its Studios business into a stand-alone provider of B2B gaming services worldwide.

It will looks to leverage this capability by driving incremental third party volume through the platform with a view to moving Studios into profit during 2016.

“In addition to the group's own B2C labels, we are in the process of securing new B2B customers that are keen to use our technology, particularly for sports betting, which we believe represents a unique and valuable opportunity for the group,” said the company.

Pragmatic Play