Despite a slightly richer offer from GVC and Amaya, 888 Holdings of Gibraltar has pulled ahead in a deal to purchase Bwin.party (including PartyPoker) for US$1.4 billion (£898.3m).

Bwin.party shareholders will receive 39.45p cash and 0.404 new shares in 888 for each Bwin.party share they now own. GVC, with financial backing from Amaya had offered a purchase price of US$1.4 billion (£908 million) in cash and stock. That would have delivered shoreholders US$1.71 (110p) per share.

Bwin.party shareholders will now own 48.9 per cent of 888 Holdings.

The move will see 888 increase its market share in an industry burdened with rising taxes and increasing regulation. Cost savings should be realized and new metrics could be established.

“The obvious question is why the Bwin.party board is willing to accept the slightly lower offer from 888,” Davy Research analyst, David Jennings said in a note to Bloomberg. “We think it reflects a preference on the part of Bwin.party management to receive equity in 888 Holdings rather than GVC.”

Most analysts are surmising that the longer established 888 offered a more secure package with increased certainty for investors.

One caveat may remain. Morgan Stanley says that the GVC bid is still on the table. You wouldn’t know it by the affirmative statements from 888 and Bwin.party, however.

888 Holdings Executive Chairman Brian Mattingley told Reuters Friday, “We believe the deal creates one of the world’s leading online gaming operators,” he added, “It’s all about scale… When you’ve got critical mass you can ride storms and take advantage of opportunities as they come along.”

Spring Owl, Bwin’s 4th largest shareholder is controlled by activist investor Jason Ader who said in a statement, “I believe not only are 888 the best buyer for this company but that its management team will realise significant long-term synergy value for our shareholders with the least amount of execution and regulatory risk.”

888 currently provides the platform for Bwin.party online casino games and the deal will enhance 888’s position in casino, poker, sports betting and bingo if shareholders agree with the board’s deal.

Revenues for the newly combined group are expected to be about $1 billion annually.

Depending on which assets Amaya would have received for their financial backing of the GVC bid, they could have become virtually untouchable as the reining kings of online poker. Amaya acquired Full Tilt and PokerStars about a year ago in a $4.9 billion cash deal making it the world’s largest online gaming company.

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