The online gaming group is set to acquire BwinParty for 25p in cash plus 0.231 new GVC shares per BwinParty share and the deal is expected to complete in the early months of next year.
If you’ve got a business that is underperforming, needs restructuring and two thirds of the revenues have come from sports betting, would you give the business to a company that’s never primarily done sports betting and has never done a restructuring? Kenny Alexander
The acquisition was announced in September after BwinParty had previously agreed a deal to be bought by 888 for approximately 104.09p per share.
Alexander told Gambling Insider that GVC was in fact the safer option, despite some highlighting GVC’s operations in grey markets as a reason for risk being attached to the deal.
He said: “I think they [critics] think it’s maybe more risky because maybe there’s a perception that GVC is smaller than 888 and therefore they’re doing a deal with a smaller operator.
“I think we are much smaller, but I actually think it would have been far riskier to run with 888. If you’ve got a business that is underperforming, needs restructuring and two thirds of the revenues have come from sports betting, would you give the business to a company that’s never primarily done sports betting and has never done a restructuring? Or do you give it to a company that does primarily do sports betting and has done a restructuring?
“We don’t choose to operate in just grey markets. We’ve got licences pretty much where everybody else has got licences.”
Alexander also revealed the reason why Amaya Gaming was cut out of the deal, after being announced as jointly financing GVC’s initial proposal to buy BwinParty in May, stating that it was purely a time issue preventing them from continuing with Amaya’s involvement, while refusing to rule out a potential deal with the PokerStars owner in the future.
“They were still interested in continuing in the process, but they did have a roadshow for the funding of their debt in New York which David Baazov had to deal with and was going to take them two or three weeks,” he said.
“He basically wanted to take three or four weeks off to deal with the roadshow and the debt and then he would come back and we would get the deal done. I didn’t think we had three or four weeks’ time. I thought we had to move quickly, so we parted ways very amicably.
“There’s no reason why we can’t do another deal with Amaya down the line. Some people have suggested we’ve got a secret deal that’s been done with Amaya and is sitting in my top drawer or something like that – that’s absolute nonsense.”
It was also confirmed by Alexander that while GVC has applied for a New Jersey licence, it could pull BwinParty out of New Jersey if its operations in that market do not improve.
He said: “If we get a New Jersey licence, the idea would be to run the US business differently from BwinParty. It’s been losing a lot of money. I think it makes sense to have some options. If the US was to open up properly, we would be in there and if it’s not losing us any money, we can see what happens in the US. But if we don’t get a New Jersey licence or if we think the US business is going to continue to lose money, no matter what, then we would take us out of the US.”
Alexander will appear in the Gambling Insider CEO Special 2016. To read the full feature, sign up here for a free subscription.