There seems to be no stopping Austrian gaming powerhouse bwin. Fresh from acquiring Italian poker site Gioco Digital and topping EGR Magazine’s Power 50, there are now rumors they are poised to execute a takeover of 888 Holdings. UK newspaper The Daily Mail report that bwin is currently attempting to raise enough ready cash to complete the buyout.
Ever since they acquired the online poker network OnGame in 2006, the company have gone from strength to strength. Online poker has formed a key part of their success, along with sports betting and online casinos. Their power in the European market was underlined by the recent purchase of Gioco Digital. The solely Italian focused online poker site had been the first to capitalize on the newly liberalized Italian gaming market. With the state monopoly destroyed there is massive potential for growth in online poker in Italy, and by purchasing an already established company, bwin have reaped the rewards faster than most.
888 is one of the most famous brands in online casino gaming and was perhaps the most successful of the early online companies. They have had plenty of success in the online poker world as well. Pacific Poker has been a mainstay for a number of years and now fronts a network that includes the likes of Littlewoods Poker. The Pacific network is currently the 12th largest in the world, while OnGame sits in 5th. If a buyout resulted in the two networks merging, they would pose a serious challenge to 4th place PartyPoker.
888 Holdings has been the target of takeover rumors before. The Mail recalls one incident in particular, when a 2006 move by Ladbrokes was scuppered by new UK tax laws. However, bwin appears to be in a very strong economic position and 888 is perhaps in their most salable state for years. Prices have dropped, given that 888 does not enjoy the dominance it once exerted. However, their subsidiary Dragonfish was recent hired by Harrah’s to provide software for the impending WSOP online poker client. This is likely to be targeted at the US market and so therefore must wait for the UIGEA to crumble. This massive unrealized potential makes 888 a very attractive proposition for the bwin executives.
Bwin recently reported excellent third quarter earnings, with overall profits up 75%. Their EBITDA increased from €16.8 million to €9.8 million and gross gaming revenues rose to €101m. Poker put in a modest effort, rising 1.3% from last year, with 3.4% and 7% rises in sportsbetting and casino revenues also contributing. All this financial success puts bwin in a strong position and should help them secure the necessary bank loans for an 888 buyout. The main stumbling blocks will be Avi and Aaron Shaked, two brothers who own 50% of 888 via family trusts.