* Bwin.Party proposes to replace third of board
* Activist Ader curbs demands, still seeks two board places
* Critic says company has squandered benefits of 2010 merger
(Adds further comment from bwin in paragraphs 10-11)
By Keith Weir
LONDON, May 16 Bwin.Party said it plans
to hire three new directors to reshape its board after an
American activist investor demanded changes in how the online
gambling company is run.
The investor, Jason Ader, says Bwin.Party has been badly
managed since it was formed by a merger in 2010. His SpringOwl
vehicle had put forward four board nominees at the company's
annual shareholder meeting next Thursday.
Former Wall Street gaming analyst Ader broadly backed the
proposals but still called on shareholders to elect two of his
nominees to the board - Michael Fertik and Kal Patel.
"We believe that this announcement is the direct consequence
of the overwhelming support we have received from our fellow
Bwin shareholders for the call for board change that we have
made," Ader said in a statement to Reuters.
Bwin.Party's own plans would replace a third of its board
with new hires who have yet to be identified. Deputy chairman
Rod Perry and fellow directors Manfred Bodner and Helmut Kern
would step down.
Bwin.Party said one of the new directors would have in-depth
knowledge of technology in digital consumer businesses, which
analysts said was an admission of a weaknesses in the board.
Philip Yea, who takes over as chairman at the annual
meeting, said the changes would create a "board that works,
rather than having one foisted upon us".
"This makes clear we have our own agenda," Yea told Reuters.
Of the two nominees Ader is pushing, Fertik is a technology
specialist while Patel is active in venture capital investment.
Bwin.Party said SpringOwl had missed its chance to have a
voice in the changes the company proposed on Friday.
"SpringOwl could have actively participated in the review
process had it taken up its right to put a nominee on the board,
which it has failed to do since February when it bought its 5.25
percent stake," a company spokesman said.
Bwin.Party is the product of a 2010 merger between sports
betting group Bwin and online poker group PartyGaming.
The shares have tumbled since the merger was announced and
SpringOwl says management had failed to extract rewards from
combining the businesses.
Bwin shares closed 3.2 percent lower at 114.8p on Friday,
valuing the company at around 970 million pounds.
In March, it posted a 35 percent drop in full-year earnings
to 108 million euros ($149.75 million) because of falling
revenue, increased gaming taxes in Germany and start-up costs in
In common with rivals, it is pursuing a strategy of focusing
on fewer markets where regulations on gambling are more clear
Ader bought a stake of more than 5 percent through SpringOwl
earlier this year and has mounted a public campaign for change
at Bwin, accusing its managers of destroying shareholder value
and allowing costs to spiral.
One top 40 shareholder said that Ader had been overplaying
his hand by nominating four directors.
"Jason's got a right to put a director on the board and he
should, but four people for 5 percent is not on," said a top-40
shareholder in the company.
The shareholder added: "Most of the travails of Bwin come
not just from the merger but also regulatory issues. So it's a
victim of what's happening to the industry rather than total
ineptitude. But Mr Ader has a point."
(Reporting by Keith Weir and Chris Vellacott; editing by Tom