Bwin Hatches the Italian Job

Investments, mergers and takeovers seem to be the order of the day for the online gaming industry at the moment. The Austrian company, Bwin Interactive Entertainment AG is a market leading online gaming and betting provider, who have recently announced a $72 million dollar takeover of Italy’s Gioco Digitale SpA.

Bwin made their announcement and intentions to purchase Gioco Digitale just a few days ago. The Austrian company is set to become a major player almost overnight within the ever-expanding Italian market.

Gioco Digitale had always prided itself on being Italy’s original and independent online gambling website, which offers skill games, alongside betting and poker options. The supposed deal will see the Gioco Digitale shareholders exchange 752,474 shares (56.3 percent of the company), for Bwin shares totalling 2.3 million.

Bwin will then purchase the remaining 43.7 percent of Gioco Digitale’s shares for a reported $36.4 million dollars after the share exchange. Bwin will also contribute $21.9 million dollars to Gioco Digitale following the presentation of their accounts.

In addition, Bwin will pay the final instalment of $7.2 million 18 months after the deal as been closed. This will only be paid if Gioco Digitale achieves certain financial targets during the remainder of 2009.

“Gioco Digitale ideally positions Bwin to take advantage of the opportunities offered by the booming Italian online gaming market, which is sustained by modern, pro-active regulation,” said Norbert Teufelberger, Co-Chief Executive Officer for Bwin.

“Besides, Carlo Gualandri will also be joining our corporate management team, allowing us to draw on his extensive entrepreneurial experience in developing and introducing new, innovative product lines in well regulated markets.”

The Italian online gaming market is rapidly growing, as figures project an annual compound rate of 32 percent, and is expected to amass $1.7 billion dollars in gross revenues by the year of 2012.

This would appear to be a very lucrative deal on the part of the Austrian company, as Gioco Digitale were reported to have generated $29.2 million during the first six months of 2009. Bwin have also reported that they be purchasing the Italian company on a debt-free cash basis.

Industry experts believe that the deal is perfectly timed, and the Italian market is ideal for the Bwin move, representing a healthy sort of consolidation at this moment in time.

Analyst Daniel Stewart & Co. said, “Gioco Digitale was the pioneer of regulated online poker in Italy, developing a [greater than] 60 percent market share at the back end of 2008. This has reduced to [around] 20 percent (June 2009) as other key new entrants have entered the market (Sisal, Snai, Lottomatica, PokerStars, PartyGaming etc).

“The combined market share of Bwin and Gioco Digitale would equate to a market share of [over] 25 percent, providing a genuinely strong, defensible and liquid poker network in the regulated Italian market, with a market size estimated at [greater than] 2bn annually.”

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