ith Sportingbet shares closing down 1½ at 44½p on Friday, it is understood that William Hill now believes its initial approach was too high. The move comes after Sportingbet yesterday posted a 35% drop in revenues to us$ 62.2 million for the three months ending October. The group also said the amount wagered in bets during the period fell to us$ 954.1 million from us$ 1.11 billion a year earlier.
Sportingbet admitted that trading conditions during the quarter had been “challenging”, but the company said it was “confident” that its results for the full-year would meet its expectations.
It is not thought that talks over a lower offer have started; the Takeover Panel has set a deadline of 5pm on Tuesday for a formal bid to be made. However, that deadline is extendable and the parties were granted further time for talks by the Takeover Panel earlier this month.
Sources close to Sportingbet said that the bid “has got to begin with a 6” and that any attempt to reduce the bid is likely to be met with a negative reaction.
Sportingbet said in October that it would back the us$ 850.9 million proposal, after William Hill returned with a sweetened offer.
The bookmaker and Aim-listed GVC confirmed in September that they were considering a joint bid for Sportingbet, following speculation in the stock market that the online gaming group could receive a takeover approach. Fellow bookie Ladbrokes had also held bid discussions with Sportingbet last year.
William Hill is primarily interested in Sportingbet’s business in Australia, while GVC would purchase the operations in other countries where the risks are greater because the regulations are less clear.
Sportingbet’s business in Australia is seen as its crown jewel, and accounts for about 90pc of its profits. The group is the market leader in both telephone and online gaming in the country.
But Sportingbet’s first-quarter results on Friday prompted speculation from analysts that William Hill will look to renegotiate its initial approach. “We continue to believe that William Hill will ultimately acquire Sportingbet’s Australian business,” said David Jennings, an analyst at Davy. “Whether it can acquire Sportingbet for a lower price than previously expected remains to be seen but either way, we still believe in the long-term attractiveness of that market,” he said.
The uncertainty over the bid has also been reflected in Sportingbet’s share price, which has hovered around the 45p level throughout the week. The group’s results were hurt in part by the scheduling of some sporting events, with the Australian Derby Day, for example, falling in November this year.
The group reported a 3.5% increase in amounts wagered at its Australian business, which Mr Jennings at Davy described as “disappointing given that gross win margins were down year-on-year”. “Usually, if gross win margins are down year-on-year, one would expect to see more customer recycling of winnings with higher amounts staked as a result.”