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888 Holdings PLC may have slipped a blue silk handkerchief into the top pocket of Bwin.Party Digital Entertainment, but it hasn’t walked away wearing the full suit.

The two online gambling companies agreed a £898.3m ($1.4 Billion USD) deal less than a fortnight ago. The cash offer was slightly less than the £900m offered by GVC Holdings/Amaya Gaming, but the nodding heads in the 888 echelons of power seemed to prefer shaking hands with those wearing blue.

The word ‘synergy’ has been used a lot in the discussions over the two rival deals. Bwin Chairman Philip Yea said that the deal with 888 would ‘generate substantial financial synergies for both sets of shareholders.’ Venture Capitalist Jason Ader – who has a 6% stake in bwin – said that 888 were by far the best buyer and ‘will realize significant long-term synergy value.’

What this effectively means is the bwin board seemed to be turned on to the possibility of 888 streamlining both companies, and turned off by the thought of GVC Holdings/Amaya Gaming taking an axe to the business and lopping off body parts.

Days after the announcement was made 888 advised their B2B partner Kambi Sports Solution that things were going to change. The bwin Sportsbook is by far their best asset earning €237.1m in revenue in 2014, 38% of sales, and Kambi will have to step aside to allow that new ‘synergy’ to happen.

There is still no real clue as to what the poker product will look like, although it is exciting times. When PokerStars acquired Full Tilt it didn’t start dismantling the Lego, and instead decided to allow the two companies to keep their brand identities. That might be more difficult with 888/partypoker, but not insurmountable.

The new deal would also elevate 888 to a position of power within the US. They are currently the only operator offering a fully regulated product in all three states: Delaware, Nevada and New Jersey. They will grow even more powerful when they take over the relationship with The Borgata in Atlantic City, which is by far the most successful operation of the lot.

News reports suggest that the GVC/Amaya Gaming bid tasted sour because bwin would have been separated into regulated and unregulated markets. GVC – who themselves operate 92% of their business in unregulated markets – would take anything shaded grey, and Amaya Gaming would have taken the regulated parts.

GVC is not taking the snub lying down. They are serious about buying bwin. They have decided to wave bye-bye to Amaya and have partnered with Cerberus Capital Management. The new force has submitted a new deal worth £1 billion.

Bwin investor Ader believes that offer will open up communications between the two parties, but believes if GVC want their offer to make some serious ripples then it needs to be higher. The current 888 deal is worth 104.09p per share, and the revised GVC offer is 122.5p per share. Ader wants that to rise to 140p per share.

“There are a lot of risks and uncertainties with this GVC bid.” Ader told Bloomberg this week.

We will keep you updated on progress. In the meantime who would you rather see taking over bwin: 888 Holdings PLC or the joint bid from GVC Holdings/Cerberus, and why?

Lee Davy

Life can be viewed as the sum of the parts or the parts themselves. I believe in the holistic view of life, or the sum. When dealing with individual parts you develop whack-a-mole syndrome; each time you clobber one problem with your hammer another one just pops up.