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PartyGaming and bwin Merger Announced

By: Joe Valentino, Friday July 30th 2010
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Ever since PartyGaming settled accounts with the United States Department of Justice, there were opinions voiced that the company will go in for a major merger. The possibility of a merger with bwin has been doing the rounds for several months. But now everything is final. A merger implementation agreement between bwin Interactive Entertainment AG and PartyGaming PLC was signed on July 29 2010. The combined entity will have 48.4% ownership of PartyGaming shareholders and the remaining 56.6% ownership of bwin shareholders. It will be incorporated in Gibraltar and listed on the London Stock Exchange.

This merger will result in the creation of the world’s largest listed online gaming company, which will be the market leader in all key verticals of online gaming. These include poker, sports betting, casino and bingo. The combined estimated 2009 revenue of PartyGaming and bwin is in the region of €682 million and the estimated earning is €196 million. The proposed merger is expected to significantly increase these figures because of the synergies involved.

Norbert Teufelberger of bwin and Jim Ryan of PartyGaming will be Co-CEOs of the new company and key management positions will be held by senior managers from the two companies. Martin Weigold will be Group Finance Director and Joachim Baca will be Chief Operating Officer. Teufelberger, who is currently Co-Chief Executive of bwin said, "This business combination makes great strategic, operational and financial sense. We will be in pole position to capitalize on the wealth of opportunities that will flow from the continued evolution and expansion of the global online gaming industry." Jim Ryan who is presently Chief Executive of PartyGaming also put forth his view in the press release. He said that the combined entity will be best placed to "exploit the growing online gaming market". He added that merger would result in a strong balance sheet, significant cash flow generation and a highly experienced management team.

The mechanics of the merger are expected to be as follows. The assets and liabilities of bwin will be transferred to PartyGaming thereby forming a European joint stock company incorporated in Gibraltar. When the merger is completed bwin shares will be de-listed from the Vienna Stock Exchange and the shares in the combined entity will be listed exclusively on the London Stock Exchange. Also a new independent, Non-Executive Chairman will take charge of the board of the enlarged Group. There will be equal executive and non-executive representation from current members of the PartyGaming Board, the bwin Board and senior management. The proposed merger is contingent to certain statutory regulatory formalities being completed.

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