GVC Holdings turned the tables in a four-month contest for Bwin.party Digital Entertainment by sealing a £1.12bn (€1.6bn) offer to snatch the online gaming company away from 888 Holdings.
GVC chief executive officer Kenny Alexander and his team convinced the Gibraltar-based Bwin.party to switch their recommendation away from 888 with a cash-and-share proposal that included larger cost savings.
Bwin.party withdrew its acceptance of an £898m offer from 888, sending 888 shares lower. 888 didn't immediately respond, though Alexander said that as far as he's concerned the contest is over.
The CEO is seeking to gain a bigger slice of an industry where consolidation is being driven by the growth of online betting and increased taxation and regulation.
"GVC looks in a very strong position now but, while 888 isn't quite dead, nothing is totally guaranteed," said Nick Batram, an analyst at Peel Hunt in London. "The gaming industry is seldom straightforward. It probably always is best to expect the unexpected."
GVC's revised offer is worth 129.64 pence a share based on Thursday's closing price, with about 80pc of that being in the form of new GVC shares.
The price is about 45pc higher than when the contest started in May, and 24 percent above the value of 888's most recent offer.
Because such a large proportion of the bid is in the form of new shares, Bwin.party's board had to take into account "our view of the longer term value-generating capacity of each offer," chairman Philip Yea said. That included likely levels of cost savings, which GVC forecast at €125m per annum by the end of 2017, more than the savings of at least $70m that had been forecast by 888 in July. Yea said combining GVC and Bwin.party is also simpler than with 888.
"The GVC-Bwin.party combination provides relatively more straightforward operational integration," he said.
Bwin.party shares rose as much as 3.7pc in London, while 888 fell as much as 9.4pc. GVC dropped 3.6 pc.
The outcome of the takeover battle has been in the balance for months, with GVC refusing to concede even after 888 won support from Bwin.party's directors for a lower bid.
"As far as we're concerned it's the end of the process," Bwin.party's Yea said.
"GVC have been very determined. They have worked very hard to catch up" with the original 888 offer.
The merger will have implications for jobs, and Bwin.party doesn't rule out some disposals, Yea said. The companies combined had about 3,100 employees at the end of last year.
Bwin.party shareholders will own 66.6pc of the resulting company. Bwin.party chief executive Norbert Teufelberger will join the board of the new company as a non- executive director.
GVC will fund the cash portion of the bid with as much as €400m of debt provided by Cerberus, and the company also plans to raise about £150m through selling shares to institutional investors and GVC directors.
Deutsche Bank AG advised Bwin.party's directors, while Houlihan Lokey advised GVC. (Bloomberg)