Sale of Bwin.party to 888 for $1.4 billion could have Nevadaimplications

Gibraltar-based 888 Holdings won the takeover battle for Bwin.party Digital Entertainment,agreeing Friday to pay $1.4 billion for the company and creating an online gaming conglomerate.

The transaction, which requires regulatory and shareholder approval, could reverberate throughoutthe fledgling U.S. online gaming market, including Nevada.

888 Holdings, which has a Nevada gaming license, partners with Caesars Entertainment Corp. in thecompany's online gaming business in Nevada and New Jersey. 888 Holdings also provides theplatform that operates the shared online poker website between Nevada and Delaware.

Bwin.party, also based in Gibraltar, partners with Boyd Gaming Corp. in the company's onlinegaming venture in New Jersey. Bwin.party has similar deals in Nevada with Boyd and MGM ResortsInternational, but the online business never has been launched. Bwin.party is not licensed inNevada.

"We look forward to understanding more about the proposed transaction," Boyd Gaming spokesmanDavid Strow said.

Tom Mikulich, MGM Resorts International senior vice president of business development, said thecompany would be "discussing with 888 and bwin.party the opportunities that this transactionbrings."

888 Holdings outbid rival online gaming company GVC Holdings for Bwin.party, which placed itselfup for sale last year. GVC partnered in the bid with Canada-based Amaya Gaming, which ownsPokerStars and Full Tilt Poker.

Eilers Research gaming analyst Adam Krejcik said he didn't believe the transaction would threatenPokerStars' dominance in the online gaming market.

"We have mixed views about Amaya losing out to 888 and how the combined entity will impact thecompetitive landscape," Krejcik said.

Buying Bwin.party allows 888 Holdings to increase its scale in a market. Combined revenue last yearwould have been about $1.1 billion, 888 Holdings said in a statement. The acquisition also will yieldcost savings and lead to creation of a separate gaming technology unit that eventually can be spunoff.

"We believe the deal creates one of the world's leading online gaming operators," 888 HoldingsExecutive Chairman Brian Mattingley told Reuters. "It's all about scale. When you've got criticalmass, you can ride storms and take advantage of opportunities as they come along."

Bwin.party shareholders will own about 48.9 percent of the merged company.

Analyst-turned-investor Jason Ader has the second-largest shareholder stake in Bwin.party throughhis New York-based Spring Owl hedge fund.

Ader said in a statement he brought 888 Holdings into the sale process in an effort to "maximize"shareholder value.

"I believe not only are 888 the best buyer for this company but that its management team will realizesignificant long-term synergy value for our shareholders with the least amount of execution andregulatory risk," Ader said.

Warwick Bartlett, CEO of Isle of Man-based Global Betting and Gaming Consultancy, said thetransaction creates the fourth-largest publicly listed Internet-only gaming company based on marketcapitalization. Bartlett said Betfair, Amaya and Playtech are larger.

Bartlett said in a statement the transaction would be more successful than the merger that broughttogether Bwin and Party Gaming, a transaction that closed in January 2011.

"888 will now have their own sports book, a huge database to cross-market to and experienced

sports book management," Bartlett said. "They could become a real challenger to the marketleaders. Key will be a speedy takeover, aligning the management with the board's strategy and quickintegration because the market is changing."

Reuters contributed to this report. Contact reporter Howard Stutz at hstutz@reviewjournal.com or702-477-3871. Follow him: @howardstutz.

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