bwin is working on a big deal   

On Monday, bwin made an official statement, regarding recent rumors about merger talks with PartyGaming. The statement was everything but a denial, besides the fact that bwin is currently not in any kind of „advanced“ negotiations. But since the online gaming industry is a dynamic industry, bwin always maintains discussions regarding possible business deals with potential companies, the company stated.

Shares of PartyGaming and bwin started with gains in the new week. Shortly after trading started, bwin tested the barrier of 42 euros. Investors would certainly welcome a merger of bwin and PartyGaming, since it would make strategic sense. „PartyGaming is a leading poker provider, while bwin is a leading provider of sports betting. But for me a merger-of-equal is not likely, I think that bwin wants to take the lead“, Cheuvreux’ Alfred Reisenberger said in a first comment on the rumors.

Fantastic Deal

Ed Birkin from Barclays Capital, who raised his target price for bwin to 55 euros at the end of last week, thinks that a possible merger is realistic. „A deal would be fantastic for both companies. At the moment, PartyGaming is probably in more need of the deal, as operationally they are underperforming bwin. However, both would benefit from the synergies, with revenue / investment synergies being the main upside, rather than cost synergies which, although there would be some, would not be massive. My view is that the companies are probably in exploratory talks, but that no deal is imminent.“

Industry in change

But both, Mr. Birkin and Mr. Reisenberger, are sure to see some changes as early as next year. The industry, in particular bwin, is very interesting, according to Reisenberger. Birkin adds: „I honestly believe that bwin will make a large acquisition / merger in the next 12 months, but whether it is with PartyGaming, 888 or someone else is difficult to say, and will largely depend upon valuation; PartyGaming seem to have a more realistic valuation of the company than 888 do.“ (bs)