SBC News Bwin to sell its social business at a €7m loss

Bwin to sell its social business at a €7m loss

bwinsignBwin.Party is close to selling its social gaming business and is in continuing merger talks with other parties.

In a pre-close trading update, the firm revealed that it is in ‘active discussions’ regarding the sale of Win, the group’s social gaming business, and that it expects to make a further announcement shortly. The company had announced a huge expansion into social gaming in May 2012 with a $50m investment in Win, but there has been little progress since. The firm has estimated it will make a €7m loss from the sale.

It’s been a tough year for Bwin.party. Aside from the infighting it has faced from investor activist group SpringOwl, it has seen disappointing results elsewhere. One key area earmarked for growth was the opening up of the New Jersey market, but its operations that have lost €10m.

The firm said that bet volumes and active player numbers have been as expected but ‘exceptionally weak gross win margin’ in sports betting, particularly in December, has impacted overall revenue performance in the fourth quarter. As a result total revenue for 2014 is now expected to be in the range €608m to €612m.

SpringOwl’s Jason Ader commented: “Management should be embarrassed by these results given the strong performance of Bwin’s peers. The board as a collective, and its chairman are not holding management accountable for loss of market share, poor expense management and business underperformance. The time for change at Bwin is long overdue.”

Change could well be on its way. Bwin also commented on the discussions it is having with third parties, potentially for a sale: “The group is continuing its discussions with several parties regarding a variety of potential business combinations with a view to creating additional value for bwin.party shareholders. As previously announced, there can be no certainty as to whether or not such discussions will result in an offer being made for the Company. Further announcements will be made as and when appropriate.”

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