Credit Suisse ups Bwin to 'neutral', sees strategic rationale to 888 deal

Credit Suisse upgraded Bwin.party Digital Entertainment to ‘neutral’ from ‘underperform’ and raised the price target to 110p from 80p, saying it’s now very likely a deal will take place with 888 Holdings.

CS said 888’s proposal makes strategic sense.

“We believe that focus on costs is short-termism, and instead focus should be on the overall strength of the resultant company. For that reason we still see the 888 proposal as the most appealing; 888's gaming experience leaves it best placed to potentially turn around the Bwin.party business, rather than extracting one-off cost savings,” the bank said.

On Monday, GVC Holdings upped its bid for Bwin, topping the bid it had already accepted from 888 Holdings.

Credit Suisse said that when Bwin's board recommended 888's bid, there was a certain level of shareholder disappointment over the scale and timing of the estimated synergies.

However, the bank viewed this positively as a focus on cost synergies often has adverse effects on revenues, something which it feels has contributed to the scale of Bwin’s top-line declines.

“Therefore, GVC's belief that it could get double the cost synergies is a concern for us, and we see more strategic rationale to 888's offer.”

At 1123 BST, Bwin shares were 0.6% higher at 112.40p.