888 and GVC head into final battle for Bwin

By Neil Maidment LONDON (Reuters) - A battle to buy online gambling firm Bwin.party is set to intensify this weekend with 888 likely to have to raise its 900 million pound ($1.4 billion) offer to see off smaller rival GVC. Bwin, up for sale since November, accepted a cash and stock offer from 888 in July but has spent recent weeks working with GVC to iron out certain issues with an improved 1.03 billion pound proposal GVC made on Aug. 7. Bwin on Thursday invited GVC to go ahead and present its best formal offer. Bwin has promised an update to the market on Tuesday after a long holiday weekend in Britain. The bid battle fits into wider consolidation in the gambling sector as firms try to bulk up in response to higher tax bills in Britain and tighter regulation. "My gut feeling is that GVC will raise its offer (to confirm its Aug.7 proposal) and 888 will improve their offer to ensure they emerge victorious," Canaccord analyst Simon Davies said. 888's bigger business, balance sheet and market capitalisation made it the more attractive suitor, he added. STRESSFUL WEEKEND 888 Chairman Brian Mattingley said on Friday the greater cash component of its bid -- 39.45p versus the 25p proposed by AIM-listed GVC -- meant it remained the most compelling option. "We are still very confident we will get this transaction over the line," Mattingley said, declining to comment on whether it would be prepared to raise its bid. "All I can say is I'm not going to have an easy bank holiday weekend." All three firms published first half results on Friday, with profit rises for Bwin and GVC. 888 showed underlying revenue growth but its headline profit figure was hit by a new UK online tax and the introduction of sales tax in some European countries. Bwin said cost savings had helped offset such tax pressures to lift adjusted core earnings for the six months to June 30 to 47.3 million euros, slightly ahead of analyst forecasts of 45.4 million euros. It remained confident on its full-year outlook. 888, which like Bwin offers casino, poker, bingo and sports betting, said adjusted core earnings for the same six months period fell 17 percent on a year ago to $40.9 million, hurt by tax charges of $19.5 million in the period. Underlying revenue was up 9 percent however and the firm reiterated its full-year outlook with current trading 'solid'. GVC also reported its first half results, posting a 14 percent rise in adjusted core earnings to 25.5 million euros on revenue up 15 percent. Shares in Bwin were down marginally on Friday, with 888 down by almost 1 percent. Shares in GVC were up 0.6 percent. (Editing by Keith Weir)