US casino giant Caesars Entertainment, Inc. and UK-based sportsbook operator William Hill PLC reached an agreement regarding the sale of the sports betting company. The £2.9 billion cash offer was initially revealed by Caesars on Monday, when William Hill responded to speculations it was a subject of a takeover bid, confirming it had received two separate offers for the business.
The board of directors of William Hill accepted the proposed buyout price but a shareholder vote will decide the final outcome. The board decided the 272p per share on the table from Caesars is a better bet than any future rival bets. The proposed price included a 25% premium on the market price before William Hill disclosed the information about the offers.
Tighter Regulation and Coronavirus Impact
By accessing the offer, the board took into account the risk of tighter future regulation in its domestic market, a serious concern after William Hill had to close more than 700 high-street betting shops due to an imposed maximum bet on terminals. Another unknown in the equation is whether the current health crisis will mean long term damage, with sports events curtailed, shops facing potential restrictions, and consumer confidence taking a further knock.
William Hill Chairman Roger Devlin outlined the board believed it was the best option for William Hill at an attractive price for shareholders.
“It recognises the significant progress the William Hill group has made over the last 18 months, as well as the risk and significant investment required to maximise the US opportunity, given intense competition in the US and the potential for regulatory disruption in the UK and Europe.”Roger Devlin, Chairman, William Hill
Caesars Eyes William Hill US Business Only
The acquisition deal Caesars intends to partly fund by issuing new stock is a move to acquire the US sports betting joint venture with William Hill it has 20% ownership and the bookmaker holding the other 80%. Caesars is only interested in the US operations of William Hill and is planning on seeking new owners for the business in the UK and other parts of the world, in the short term following completion of the deal
“The opportunity to combine our land-based casinos, sports betting and online gaming in the US is a truly exciting prospect. William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to better serve our customers in the fast-growing US sports betting and online market.”Tom Reeg, CEO, Caesars Entertainment, Inc.
The announcement that the proposed offer from Caesars was accepted by William Hill eliminated the other candidate for the sports book operator, private equity fund Apollo. According to some speculations, Apollo may be interested in buying the non-US business of William Hill, but this cannot happen before the deal completes.
Caesars’ cash offer will have to get the approval of 75% of William Hill’s shareholders for the acquisition to materialize.