Jason Ader is one happy activist at the moment as Bwin.Party Digital Entertainment will be acquired by rival firm 888 Holdings PLC in a $1.4 billion cash and stock deal. Ader, who manages SpringOwl Associates, spearheaded a board shakeup in British gambling firm Bwin last year by first holding a proxy battle with the firm a month before their annual shareholders meeting in May, before finally getting their cooperation in putting a stop to what he called a continuing decline in the business. The billion-dollar acquisition of Bwin marks a win for Gibraltar-based 888 Holdings as well, who fought with Isle of Man-based GVC Holdings for the rights to acquire the firm. The acquisition also marks a triumph for an American activist in Europe, where few American activists have seen much success, The Wall Street Journal notes.
Following activist funds like SpringOwl, an investment vehicle for Jason Ader and Andrew Wallach’s Cumberland Associates, is important because it is a very specific and focused strategy in which the investor doesn’t have to wait for catalysts to realize gains in the holding. A fund like Ader’s can simply create its own catalysts by pushing for them through negotiations with the company’s management and directors. In recent years, the average returns of activists’ hedge funds has been much higher than the returns of an average hedge fund. Furthermore, we believe do-it-yourself investors have an advantage over activist hedge fund investors because they don’t have to pay 2% of their assets and 20% of their gains every year to compensate hedge fund managers. We have found through extensive research that the top small-cap picks of hedge funds are also capable of generating high returns and built a system around this premise. In the 32 months since our small-cap strategy was launched, it has returned over 139% and beaten the S&P 500 ETF (SPY) by 81 percentage points (see more details here).
It also appears that activist funds like SpringOwl may be setting their sights on Europe, as Ader told The Wall Street Journal that he is open to seeking new deals in the region. “I’ll take credit for being the most successful American activist in Europe,” the publication quotes Ader as saying before writing that the activist is “open to trying more”.
Follow Andrew Wallach And Jason Ader's Cumberland Associates / Springowl Associates
All the fighting inside Bwin and the eventual reconciliation started when SpringOwl acquired a 6.1% stake in Bwin for about $100 million in March 2014. Ader said in April last year that he did not want to see “boardroom dysfunction” in the firm. He pushed for four new board seats in Bwin and recommended directors including Michael Fertik, Founder and CEO of Reputation.com, who is a specialist in managing reputations in the connected world.
By May of last year, Ader revealed he and SpringOwl, by then the fourth-largest shareholder in Bwin, “have received incredible support from the Bwin.Party shareholders” for their proposals, according to a report from Reuters at he time. Before the Bwin shareholder meeting in late May, Ader and the firm saw things eye-to-eye and Ader got Daniel Silvers, the president of SpringOwl, a seat on the Bwin board. From then, The Wall Street Journal says that Ader developed a strong relationship with Bwin Chairman Philip Yea, who assumed his post in April of last year. It was also Ader who is said to have urged 888 to negotiate with Bwin when it opened itself to being acquired. Bwin announced in November of last year that it was negotiating a merger with multiple companies.
The terms of the deal will have 888 Holdings paying 104.09 pence per share, comprised of 39.45 pence in cash and 0.404 new 888 shares, which is a 16.4% premium over tBWin’s share price on May 14, the day before GVC Holdings announced its bid for Bwin. Meanwhile, Ader told the publication that he will acquire as much 888 Holdings stock as he can in the deal because he believes the resulting firm can possibly take on online-gaming rival Amaya.
“[888 Holdings has] always been on my radar as the management team that would probably run the bwin assets better than anybody else,” Ader told The Wall Street Journal. In a statement, he said that he believes that 888 Holdings is not only the best buyer for Bwin, its management team will also realize significant long-term synergy value for Bwin shareholders with the least amount of execution and regulatory risk.
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