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Annual Report & Accounts 2016 - Notes
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105 28. BUSINESS COMBINATIONS 28.1 Acquisition of bwin.party It is part of the core strategy for the Group to improve the quality and mix of the Group's earnings through acquisitions, especially where these increase the markets in which the Group trades and where there are opportunities for high levels of cash generation through synergies. On 1 February 2016, the Group acquired 100% of the share capital of bwin.party digital entertainment plc ("bwin.party"), an online gaming company traded on the Main Market of the London Stock Exchange and listed on the Official List (Premium Segment), for total consideration of €1,506.6m as set out in the table below. The acquisition resulted in GVC obtaining control of bwin.party from 1 February 2016, and this is being accounted for as a business combination in the current year. The terms of the acquisition included an offer of 25p plus 0.231 new GVC shares for each bwin.party share. At the date of the acquisition, there were 843m bwin.party shares and 14m of share options and the closing price for GVC Holdings PLC shares on the previous day was £4.67. The total fair value of the consideration paid was €1,506.6m as set out below: No of shares m Value £m Exchange rate Value €m Total bwin.party shareholding 843.5 GVC shares issued (0.231 per bwin.party share, at a price of £4.67) 194.8 909.9 1.3205 1,201.5 Cash payment (£0.25 per bwin.party share) 210.9 1.3205 278.5 Cash-settled options 20.1 1.3205 26.6 Total consideration 1,140.9 1,506.6 The fair value of the assets and liabilities recognised at the date of acquisition is set out in the table below: Fair value €m ASSETS Intangible assets 608.0 Property, plant and equipment 44.5 Trade and other receivables 107.8 Investments and available for sale assets 4.5 Assets held for sale 12.3 Short-term investments 15.6 Cash 115.7 Total assets 908.4 LIABILITIES Trade and other payables (82.8) Client liabilities and progressive prize pools (118.0) Provisions (15.2) Loans (39.4) Taxation (including gaming tax) (31.9) Deferred tax (79.6) Total liabilities (366.9) Non-controlling interest 1.2 NET ASSETS 542.7 Fair value of consideration paid 1,506.6 Goodwill recognised 963.9 BUSINESS COMBINATION COSTS 54.7 The fair value of trade and other receivables was €107.8m and included trade receivables and payment processor balances with a fair value of €78.4m. The gross contractual amount for trade receivables and payment processor balances due was €80.2m, of which €1.8m was deemed to be irrecoverable. The goodwill consists of assembled workforce, future growth and business reputation.