James Moore: Why GVC shouldn’t up the ante in Bwin.party battleComments Off on James Moore: Why GVC shouldn’t up the ante in Bwin.party battle
The AIM-listed gaming outfit confirmed this morning that it’s still in the game and Bwin.party is all ears.
No wonder, given what its shareholders lost through the messy merger of PartyGaming with bookie Bwin that created it.
The problem is GVC looked like it was all in when it put £906.5 million of chips on the table — more than 888 had — and was still rejected.
That speaks volumes: GVC had partnered with Canada’s Amaya for a cash and share bid which would have been followed by a break up.
But GVC’s pal was ponying up most of the cash and that made Bwin.party wary. By contrast, 888’s cash, shares, and cost-savings looked like a sure thing.
Now GVC is mulling going it alone. Unfortunately its shares are lower rated than Bwin.party’s and 888’s, and they’re only traceable on the Alternative Investment Market. They’re a bust as acquisition currency so it will have to find investors willing to cough up an awful lot of cash.
In other words, GVC doesn’t have much of a hand. That’s not necessarily a problem in poker. The worst hand sometimes wins but GVC would still be better off sitting this one out.
Its gambling instincts are understandable. It thinks reversing into Bwin.party is a ticket to the World Series. A one time chance to hit it really big. Vegas baby!
But a smart gambler would sit back and wait. The clue is in the merger that created Bwin.party: this is an industry that has been so badly managed that GVC may eventually be able to snap up 888.Bwin.party for less than it’s prepared to pay up now.
Cost cuts lost in post
Holding on to Royal Mail shares after the initial rush to sell post privatisation (as I did) hasn’t proved to be the worst decision in the world.
They fell sharply in the second half of last year but have since recovered some vim.
Other than the elimination of a competitor in Whistl, it’s not terribly easy to see why.
When it’s not growling at its regulators, Royal Mail has at least been trading in line with expectations.
But those expectations aren’t terribly challenging. Which leaves its investors reliant on its promises of cost cuts and modernisation.
When they’re going to arrive is open to question. Perhaps with the second post.
But Royal Mail got rid of that, didn’t it?