International edition
October 21, 2020

The casino giant already owns 20% of William Hill’s U.S.

Caesars in advanced takeover talks with William Hill, valuing bookmaker at USD 3.7 B

Caesars in advanced takeover talks with William Hill, valuing bookmaker at USD 3.7 B
"Following an initial written proposal from Apollo on 27 August 2020, William Hill received a further proposal from Apollo and proposals from Caesars," the company said.
United States | 09/26/2020

The bid significantly undervalues the company but there seems limited scope for bid competition due to the joint venture terms and also since William Hill’s board said it would be minded to recommend the offer. The bookmaker has also received takeover proposals from buyout firm Apollo Global Management.

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illiam Hill has received rival takeover proposals from buyout firm Apollo Global Management and Caesars Entertainment, the British betting firm said on Friday. Shares of Caesars Entertainment rose nearly 7% on the news, while Apollo’s stock was up almost 3%.

Caesars' bid values the British bookmaker at 2.9 billion pounds ($3.7 billion) and would give the casino operator full control of a quickly expanding U.S. sports-betting and online business.

Caesars was considering offering 272 pence per share and William Hill’s board was inclined to recommend such an offer to shareholders, the companies said on Monday, Reuters reports.

Caesars only holds 20% of its U.S. joint venture with William Hill but the business is built on a presence in Caesars casinos and its brand name, which the casino owner said it would have the right to terminate in the event of an Apollo buyout.

The bid significantly undervalues the company but there seems limited scope for bid competition due to the joint venture terms and also since William Hill’s board said it would be minded to recommend the offer, Jefferies analysts said.

Stifel analyst Bridie Barrett said the brokerage’s valuation range for William Hill is 270 pence to around 400 pence.

“While a termination of the relationship with William Hill under new ownership makes little business sense, it does add risk for a private equity acquisition...a price at the upper end of our range is unlikely,” Barrett said.

William Hill’s shares were already trading close to two-year highs before news of the proposals, having fallen to their lowest in 20 years in March.

It has offset regulatory pressure at home by expanding in the U.S. and partnering with CBS Sports and ESPN to cash in on the relaxation of sports betting rules there.

To fund the deal, Caesars said it was raising equity and would take out $2 billion of new debt secured against William Hill’s non-U.S. businesses.

Caesars said the enlarged sports and online gaming business in the U.S. could generate between $600-$700 million in net revenue in FY2021.

William Hill shares rose more than 40% Friday, valuing the company at over £3 billion, equivalent to $3.82 billion. Under U.K. takeover rules, Caesars and Apollo now have until Oct. 23 to either make an offer for William Hill or walk away. 

U.S. commercial slot-machine revenue this year through the end of July was $9.24 billion, down nearly 45% compared with the same time last year, while casino revenue from table games fell 46% to $2.6 billion, according to the AGA. Meanwhile, sports-betting revenue was up nearly 19% at $394 million, with more states having legalized the industry. Online casino revenue nearly tripled for the period, to $778 million.

William Hill has been hit hard this year by the coronavirus pandemic, prompting it to permanently close more than 100 of its U.K.-based stores. However, one big growth area for the company in recent years has been the U.S., where it has sought to tap the burgeoning sports-betting market. William Hill US accounted for 7% of group revenue in the first six months of the year.

The U.S. online casino and sports-betting market is expected to grow to $18 billion in revenue by 2025, with the top three players in market share projected to be Flutter Entertainment at 28%, DraftKings at 20% and Caesars at 12%, according to a Macquarie Research. Flutter Entertainment has the betting brands FoxBet and FanDuel.

Caesars already owned 20% of William Hill’s U.S. arm under in a deal signed two years ago with Eldorado Resorts, which merged with Caesars in July.

Caesars' takeover of Eldorado extended that deal to iconic properties like Caesars Palace. About 15 additional locations should be added in coming weeks, including the Horseshoe in Council Bluffs, Iowa, and the Harrah’s in Atlantic City.

They would bring William Hill’s total to 170 retail locations in 13 states, the company said.

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