H115 update and bwin.digital proposal
GVC Hldgs Plc (LONDON:GVC) has announced a positive H115 trading update with net gaming revenue up 14% against a strong FIFA World Cup comparative. It declared a 14.0c quarterly dividend (2014: 12.5c), implying an annualised 9.0% dividend yield. GVC reports that it has registered a softening in player activity in Greece, but the board “remains confident for the outlook for the remainder of the year and beyond”. GVC has today confirmed that it has made a proposal to acquire bwin.party and is working with it to finalise the offer, although there is no certainty that an offer will be made.
Record H115 trading
H115 net gaming revenue (NGR) was €120m, up 14%. NGR/day was €663k (H114: €580k), within which sports was €302k, up 5% despite a margin of 8.9% (H114: 9.9%) due to “punter-friendly” results. Gaming NGR/day was €361k, up 23%. GVC has a presence in Greece via its partner Centric Multimedia (see our Outlook report of 1 April) and continues to monitor events. It says that it is too early to forecast what, if any, the implications will be and whether they will have a material effect on its Greek operations in H215. Our forecasts are unchanged from those published in our Update note dated 5 May.
Offer discussions with Bwin.Party Digital Entertainment (LONDON:BPTY)
GVC has confirmed that it has made a proposal to acquire bwin.party (BPTY.LN) at a price of 110p/share, valuing bwin.party’s current share capital at £908m. The proposal would be jointly financed with Amaya Inc (AYA.CN) and comprises a combination of new GVC shares and cash. bwin.party is a global online gaming company whose brands include bwin, partypoker, partycasino and Foxy Bingo. Its 2014 revenue was €612m and clean EBITDA was €101m. An acquisition would constitute a reverse takeover and require shareholder approval.” CEO Kenny Alexander says that “based on our experience with the successful Sportingbet acquisition and restructuring, we believe the potential combination of GVC and bwin.party would result in substantial financial and operating synergies and represent an excellent opportunity for both GVC and bwin.party shareholders”. GVC and bwin are now working together to try and finalise the offer over coming days.
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