Activist Investors Like Jason N. Ader Often Seek Change Instead of Control
The largest online gambling company in the world, Bwin.Party, today agreed to work with U.S. activist investor Jason N. Ader. The agreement averts a battle for control of the UK-based Bwin.Party. The agreement is similar to the bargain Jason Ader made with International Game Technology last year, when he received a position on IGT’s board of directors.
The activist investor was a New York Stock Exchange gaming analyst before he started his career in asset management. He is starting to gain a reputation in the online gambling industry. Company executives might not like to hear he’s interested, but Ader has the capital to force the hand of company executives.
SpringOwl Asset Management’s Push for Change
In April 2014, Jason Ader’s hedge fund, SpringOwl Asset Management, mounted an attempt to expand the board of directors for the Bwin Party Group. Mr. Ader sought to add four of his own candidates to the board, which would have given him effective control of the company.
Partnership Details
As part of the bargain struck today, one of the four candidates will join the board of Bwin.Party. That candidate is Michael B. Fertik, the chief executive and founder of Reputation.com. In return, the president of Bwin Party, Daniel Silvers, will join the board with SpringOwl’s assent. Previously, SpringOwl had four resolutions it wanted to put before shareholders at the Thursday meeting.
What Is an Activist Investor?
Activist investment was a feature of the corporate landscape in the 1980’s. In those days, activist investors like Carl Icahn and T. Boone Pickens were often branded “corporate raiders”. Unlike the corporate raiders of the past, who sought total control of a corporation, an activist investor is more interested in effecting change than control.
According to Reuters, an activist investor “push(es) for change at companies they believe are undervalued and can provide better shareholder returns through a change in strategy or management.” Such investors have become trendy in the post-2008 recession. Financial analysts see them as a force of positive change, taking companies set in their ways and forcing them to modernize and adapt to a changing business environment.
In one study of 40 activist investment companies in the post-2008 financial world, such companies outperformed their traditional counterparts significantly. While they are often disliked by the executives whose companies they target, they are seen as a good innovation for the corporate enterprise as a whole.
Why Target Bwin.Party?
Bwin.Party owns a network of online casinos, poker sites, bingo parlors, and sports betting portals. In recent months, American activist investors have been seeking out foreign companies for takeovers. Jason N. Ader is one of those investors, and the British gaming company appeared to be a perfect candidate for change.
Activist investors seek to buy large quantities of shares in a company, then use pressure to change the company for the better. In this particular case, SpringOwl owns a 5% stake in Bwin.
Forces of Change
Since Ader’s campaign began, Bwin has seen three directors steps down (Rod Perry, Helmut Kern, Manfred Bodner) and has had a new chairman appointed. While Simon Duffy is still the acting chairman, Philip Yea is set to become chairman at the end of the Company’s Annual General Meeting today (22 May 2014).
The new chairman made a statement today about the bargain. Philip Yea’s statement read, “I am pleased to be able to demonstrate common ground with SpringOwl and welcome its support.”
Ader’s Complaint
Mr. Ader has complained that the company has fallen behind its competition since a merger was formed betwen Bwin Interactive Entertainment and PartyGaming in 2010. Jason Ader said on Thursday he welcomed the latest round of changes. “Bwin.Party is a business with great brands and enormous potential,” said the former Wall Street gaming analyst.
In 2013, Ader turned his sights on International Game Technology. He forced IGT to give him a seat on its board. In October 2013, the investor merged Ader Investment Management with Cumberland Associated to create Owl Spring Asset Management. Owl Spring began operations with $225 million in capital. About $30 million of that capital was from Jason Ader and Cumberland CEO Andrew Wallach.
Shares on the London Stock Exchange were down 1.2% in afternoon trading, though the full impact of the Thursday announcement will not be known until Friday trading begins on the LSX. Much of the speculation until now has been about a possible takeover attempt by Ader, which had a great deal to do with the Thursday sellouts on the London Stock Exchange.
