What we know about the 888 and bwin.party deal

888 has bounced off the ropes to agree a proposed £900m acquisition of bwin.party just one week after rival bidder GVC said it was in prime position to seal a deal.

And while this morning’s announcement left a lot of questions unanswered, here’s a quick run-down of what we do know about the seemingly imminent part-cash, part-paper agreement.

Game over for GVC?

Not just yet. eGR understands GVC is still working behind the scenes in an attempt to salvage a deal and will be heartened by the fact that 888’s proposal of 104.9p per share is lower than its own offer of 110p. However, bwin.party has said that the 888 deal provides less risk from a merger execution perspective – with the company perhaps preferring to err on the side of caution following the ill-fated bwin and PartyGaming merger.

The deal creates a new gaming giant

Perhaps an obvious point to make but a combination of the two businesses will create a new egaming power player. Combined 2014 revenues amount to approximately £700m, putting it ahead of the likes of William Hill (£527m), Betfair (£477m) and the now Amaya Gaming-owned Rational Group (£621m) – which was in line to take a chunk of bwin.party as part of the GVC bid.

Poker to profit

The acquisition of bwin.party’s poker business should be seen as something of a win-win. Not only will 888 be able to share liquidity across the brands and at a stroke increase value, but it also keeps the partypoker business out of the clutches of major rival and PokerStars’ owner Amaya Gaming. 888 said it will keep the partypoker brand active, although COO Itai Frieberger this morning admitted it would be a “challenge” to share technology and at the same time maintain brand differentiation.

Combi means no more Kambi

Earlier this year 888 spoke of its desire to own its own sportsbook technology and this now looks likely to happen thanks to the bwin sportsbook. The deal will bring to an end 888’s fruitful relationship with its B2B sportsbook provider Kambi, which in the past two years has helped 888 build a meaningful if modest sports betting business. 888 said its sportsbook will migrate to the bwin technology although Kambi is likely to remain in the picture for some time yet.

Complementary market coverage

Frieberger this morning told analysts he was “surprised” at how little overlap there was between the two companies’ customer databases. The firm pointed to the fact that 888’s major market was the UK while bwin.party has a large German business, meaning a merger will result in very little customer duplication. And as the two biggest players in the burgeoning US market, the deal will give the combined company a commanding position ahead of the likely re-entry of PokerStars.

B2B spin-off

888 also revealed plans to spin-off bwin.party’s technology division into a new separate B2B business called Studios. The company said it had been looking at ways in which it could extract value from its assets, although the creation of the new entity is unlikely to occur before 2019 which allows for time to build sufficient scale. Studios would be listed with shares awarded to 888 shareholders.