Spring Owl acquires 6.1 percent of Bwin.Party Digital Entertainment driving the online gambling operator shares upward.
Fresh investments drive Bwin.Party Digital Entertainment shares up. Sometimes the reputation of investors being able to do miracles with underperforming companies is enough to provide confidence and increase the share prices.
Such was the case with the Bwin.Party acquisition by Spring Owl, a New York based investment company. The asset management firm purchased 6.1 percent stake in the renowned online poker and casino operator. Bwin has been long eyeing the US market after the American gambling laws changed allowing more freedoms.
Spring Owl has also placed one of their executives on the Bwin.Party board of directors. This move is perfectly in line with the usual boardroom shake ups and company policy alterations after a purchase.
Share prices go up
Bwin.Party shares increased after an acquisition
• Spring Owl investment firm bought 6.1 percent of the company
• Bwin.Party had a very bad financial year in 2013
• Launched an online poker site in the United States together with Borgata
Right after the acquisition Bwin.Party shares increased over 12 percent. But analysts say that the market is anticipating imminent break-up of the company. In case the online gambling operator fails to find a way out of the appalling 2013 results, the firm can be sold in one piece or broken into many.
Bwin.Party revenues decreased 19 percent to EUR 652 million, and earnings fell by 25 percent to EUR 108 million. But the annual dividend is up by 5 percent.
Edison Investment Research analyst, Jane Anscombe, was quoted in American gambling news: “With Spring Owl on board Bwin could be broken up if 2014 does not show real signs of change. It is trading below the peer average, reflecting its regulatory profile”.
He went on to add: “Current trading shows 6 per cent growth on the fourth-quarter but with New Jersey (the market as a whole) having started more slowly than expected we are likely to have to trim our 2014 earnings forecast by 5-6 per cent”.
A world from the CEO
But the management is confident the company will climb back up from the pitch it was in 2013. Here’s what Norbert Teufelberger, Bwin’s Chief Executive Officer, had to say: “2013 was a challenging year for our business, but it also marked a turning point as we increased our focus on regulated and to-be-regulated markets, began to roll-out new and refreshed versions of our mobile and desktop products, and commenced the transformation of our technology infrastructure through the adoption of the Agile development methodology.”
He ended up saying: “Having streamlined the shape and size of our business we now have the foundations to return our business to sustainable growth.”
2013 performance figures
The 2013 full-year results for Bwin.Party Digital Entertainment were not great to say the least, but the company says they are back on track now. Most of the problems were attributed to bad economic situation worldwide and especially in Greece.
Here are the most important points of their yearly financial report:
• Total revenue decreased to EUR 652.4 million (EUR 801.6 million in 2012). It has shown a shift from “volume to value”, ISP blocking in Greece, migration losses and the full year impact of new gaming taxes in Germany; as for the nationally regulated and/or taxed markets, they accounted for 53 percent of total revenue (43 percent in 2012)
• Gross gaming revenue via mobile devices increased by 77 percent to EUR 76.9 million (EUR 43.4 million in 2012)
• Bwin.Party have successfully launched an online poker site in the United States together with Borgata in New Jersey where online poker is now legal
• Total costs were reduced by EUR 97 million in 2013 compared to 2012
• Clean EBITDA decreased to EUR 108 million (EUR 164.9 million in 2012) attributed to lower revenue, an increase in gaming taxes in Germany and the inevitable start-up costs in New Jersey
• Continuing operating profit was at EUR 51.9 million (loss of EUR 16.5 million in 2012), and was driven by release of acquisition fair value provisions, as well as total absence of retroactive taxes and lower amortisation costs
• Continuing Clean EPS decreased to 7.3 EUR cents per share (14.7 EUR cents in 2012)
• Recommended final dividend increased by 5 percent to 1.80 pence per share (1.72 pence in 2012) making a total FY13 dividend of 3.60 pence per share (3.44 pence in 2012)
Management was also quick to note that the average daily net revenue was increased by 6 percent compared to Q4 2013
Time will surely tell if Bwin.Party can manage to hold on to their company. The partnership with Borgata will certainly provide them with such opportunity since the online poker in New Jersey is taking off nicely.