Q&A: Bwin.party CEO Norbert Teufelberger

Q: How is your deal with GVC progressing?

A: Everything is on track. We are very busy right now preparing documents for our shareholders and GVC’s shareholders, a full prospectus for GVC and court meeting documents, and we plan to issue those to both sets of shareholders by mid-November, and we will be holding EGMs and court meetings in late November/early December. We expect the acquisition to close sometime in Q1 next year, but there is no specific date.

Q: Aside from bid price, why do you believe GVC brings the most value to your shareholders?

A: What we liked a lot was the DNA of our sports betting operations. So GVC formulated a clear vision to us for growth. As you know that was something we were lacking last year. We will achieve greater cost savings and synergies than the €125m by the end of 2017 on an annualised basis.

What impressed the board was the GVC integration is much simpler than the 888 plan, and we believe it can be completed within two years. And we really liked the management team, although I have to say the 888 management team also have a very good proven track record. All in all, it is going to take us a year/year and a half shorter to complete the integration that it would have with the 888 deal.

Q: Was GVC a better fit from a cultural perspective too?

A: Yes, the cultural fit was a little bit better with GVC than with the 888 team. And also GVC’s appetite to explore our brands into new markets, which will provide us with much needed resources to fund our continued growth and positioning in increasingly competitive nationally regulated markets was appealing. As you know, Paddy Power Betfair will be a new powerhouse, then you have bet365, and Ladbrokes merging with Gala Coral. So we think we have a proposition in place that will benefit our shareholders in the long-term.

Q: Cost synergies appear to be at the heart of the acquisition. Where will they come from?

A: We are going to migrate the GVC business onto the bwin.party platform. Both companies operate a strong sportsbook so we are going to create a best of breed team from the two teams. The plan is to form the best possible team from both organisations, and we may even look outside of GVC and bwin.party to fill some of the key positions. There is nothing really cast in stone, but when you look at the duplication of two sportsbooks, and you are able to remove one technology entirely, there has to be more synergies than with the 888 transaction that didn’t offer that.

The two businesses fit together very well, but if you are closing down one technology set up there will be offices and staff that have to go with it. There are certain efficiencies there, but also bear in mind that on our side we have been very successful in the past 12 to 18 months to take costs out of our current operations, so we have done a lot of work already. And now the new team is going to look at it again and try to find the best possible set up moving forwards.

Q: What will happen to the US arm of the business? Will it be sold to Amaya?

A: GVC intends to file an application for licensing in New Jersey expeditiously. For the time being the business will continue to operate as it is. What Amaya’s interest is, it’s difficult for me to say. Clearly we have a nice position in New Jersey but it is still a smaller market than everyone expected, and in the US it will all depend on the proliferation of new states coming online. That is going to be extraordinarily important for the US and on that point there is no clear visibility at the moment.

Q: What about the other parts of the business? GVC appears to have no interest in poker and bingo so what will happen to these?

A: With bingo we have a very strong brand in the UK which is performing very well. It’s too early to say what is going to happen. It is obviously going to be a decision of the new incoming board. But for the time being I think everything will be looked at and a decision will be made within 12 months of the deal closing.

Q: What do you consider your greatest achievement during your tenure as CEO of bwin.party?

A: That’s a tough one. I have been with bwin for 17 years now. It has been a very challenging period, with a lot of change involved. The business and industry today is very different to what it was 16 years ago. But when you look at the achievements, I am proud that we are now seeing the benefits of the PartyGaming bwin merger, even though on paper it has been a tough integration process. We have really become a good operator again, we have combined the two companies technologically and no one else has gone through that process.

I think many will have to go through that effort to know exactly what it means and just how painful it can be, particularly for us when the gaming world changed around the rise of mobile. So ultimately we managed to get through that process and we now have a new setup ahead of us where we can use that experience and hopefully get a result in terms of revenue growth out of it. In this industry you have to love change, so I think manoeuvring through all of the changes in recent years is my biggest achievement.

Q: So the merger wasn’t a mistake?

A: I don’t think it was a mistake. It was more difficult to implement that we initially thought, but many mergers are. For a number of years we have to exit certain markets, which was very hard to plan ahead for. The US didn’t play out the way we envisioned it, which was a major idea at the time. But you always have to look back and ask whether you made the right decision at the time – it’s very easy to say five years later that you would have done things differently. But having the same information available to us, we would have done the same thing again.