MBO at Gaming VC - shareholder to win or lose?
We have been following the Gaming VC situation carefully on this blog. A recent takeover approach was not mentioned in the recent results.
Now we see why - it appears that there is going to be an activist investor sponsored MBO. This is no surprise and a trawl of my previous posts raised this possibility.
Now, from a business perspective this makes absolute sense. GVC will be freed from excessive regulation, could re-enter the US and expand rapidly with the red tape associated with a listing.
But what of the poor shareholder (not so poor after a more than 100% rise in the share price recently)?
GC has been massively undervalued for a while now and only recently has the market woken up to this fact. Even so, given the low PE and large yield GVC is still cheap.
The problem as I have stated before is that it is looking increasingly likely that £3 to £3.50 will be enough to close the deal and take GVC private.
THe market sets the price and the management get a good deal. It means the existing shareholders need to fight hard to a good price. I expect they will not have the stomach for the fight and £3 might be enough (still a good premium on today's £2.20 price).
We await developments with interest.
Chief Executive ‘To Lead MBO’ At Gaming VC
Scott Longley, 02/05/2008
GamblingCompliance Ltd.
With the current chief executive at Gaming VC set to lead an activist shareholder-backed takeover bid for the company, it appears likely that the online operator could set upon a path of aggressive expansion freed from some of the regulatory concerns that have dogged the company to date.
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