Amid the clamor of the worldwide stock exchanges – and their rapid, dizzying up and down movements of the past few weeks – rumors are being heard of one of the top online gaming enterprises being seen as a prime takeover option.
The Independent, a newspaper and website in the United Kingdom, is reporting that there are takeover talks in the works for the largest online gaming operation in the business, Bwin.Party. Writer Toby Green states that Bwin.Party is being looked at by several foreign investors who may be willing to take a chance with online gaming because Bwin.Party is allegedly being looked at for takeover by an unlikely American source.
Green reports that speculation Monday focused on Bwin.Party allegedly being bought by Wynn Resorts, whose CEO, Steve Wynn, has dallied with online gaming in the recent past. The rumored price for the buyout, 170p per share, was significantly higher than the stock was trading at on Monday, 104p on the London Stock Market. The rumors of the takeover drove Bwin.Party stock to as much as 107.8p before it settled to 105.7 by the end of the trading day.
Analysts are saying the takeover by Wynn Resorts is premature at best. Green reports that online gaming traders state that “acquisitions in the sector were unlikely until there was further clarification over the potential regulation of online gambling in the United States.” With that said, Green does say that there is potential activity lurking for Bwin.Party, but it will come from a competitor rather than a live casino operation. Green suggests that one of Bwin.Party’s top competitors in the online gaming market, William Hill, could very well be the leading candidate, among other online operations.
The history of Bwin.Party is especially interesting because, when the merger took place, it united two of the most powerful online gaming operations in the industry. For years, PartyGaming had been among the leaders in the online poker industry with PartyPoker. Even after PartyGaming left the U. S. market in 2006 following the passage of the Unlawful Internet Gaming Enforcement Act (UIGEA), it still remained as one of the top three poker operations in the industry.
Bwin, for its part, was at the forefront of the online sports betting world since its inception in 1997. It moved gradually into the online casino industry in 2001 and online poker in 2004 and was a significant player in both industries.
The two companies engaged in a long courtship before the companies actually merged. Rumors began in 2009 about the potential for the two online gaming giants to become one company, but both sides denied that such talks were in progress. It wasn’t until the summer of 2010 that both companies finally admitted that merger talks had been fruitful and that they would join forces in early 2011. The shareholders of the companies approved the merger in March of this year and, in April, Bwin.Party Digital Entertainment PLC was born.
Since that merger, the new Bwin.Party has been unable to maintain its stock price while it has become the largest online gaming operation in the industry. According to Green’s report, “a steady slide – exacerbated by the sharp falls seen across the markets in the past few weeks – has resulted in its share price plummeting by 45%.” If this is the case, that would mean that Bwin.Party shares on the London Stock Exchange were trading close to 200p (192.1p) at the time of the merger, much lower than their 105.7p price at the close of trading on Monday.
While Wynn Resorts operates some of the most impressive high end casino properties in Las Vegas and Macau, CEO Steve Wynn has been, at best, uncommitted to online gaming. A longtime opponent of online operations, Wynn softened his stance at the beginning of 2011, entering into an agreement with PokerStars for a potential U. S. online poker operation in March. That agreement fell through, however, with the events of “Black Friday” and the indictment of PokerStars’ executives by the U. S. Department of Justice in April.
The rumors of the potential takeover of Bwin.Party have driven their stock price higher on the London Stock Exchange. At the close of business on Tuesday, Bwin.Party shares are selling at 113.37p, a 7.26% increase over its closing price on Monday.
