Following a statement last week from William Hill, Caesars Entertainment confirmed on Monday that it is “advanced” talks to acquire the UK-based sports betting leader.
The offer on the table right is for Caesars to pay 272p ($3.50) per William Hill share, making the total value of the potential takeover £2.9 billion ($3.7 billion). The price is about 58 percent higher than William Hill’s 172.55p ($2.22) adjusted close on September 1, the day before Caesars says it made its initial offer.
On Friday, William Hill announced that it has been approached by two different companies about a potential acquisition. U.S. private equity Apollo Management made its first offer to William Hill on August 27. Caesars followed with multiple offers and the Apollo came back with one more. The terms of Apollo’s offer(s) has not been made public.
On the news, William Hill’s stock price jumped, closing more than 40 percent higher on Friday. Aviva Investors chief investment officer David Cumming told BBC’s Today that he thinks it is entirely possible that the bidding might not be done. Looking at comparable valuations, Cumming said that an offer could come in above Friday’s closing price.
What really catches Caesars’ eye is William Hill’s U.S. sportsbook business, spanning 170 locations and 13 states.
“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” said Caesars CEO Tom Reeg. “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.”
In fact, William Hill’s sports betting expertise already does complement Caesars’ current offering…somewhat. In January of last year, William Hill signed a 25-year deal to be the sportsbook operator for Eldorado Resorts. In turn, Eldorado took a 25 percent stake in William Hill US and more than 13 million shares of William Hill plc.
When Eldorado and Caesars completed their $17.3 billion merger this summer, that quarter of William Hill US moved over to the new company. Hence, Caesars owns 25 percent of William Hill’s United States business.
It is largely because of this that David Cumming believes Caesars is the front runner in the race to nab the UK bookmaker, citing pre-existing “synergies” between the two companies. It probably doesn’t hurt that Caesars is a massive casino company.
Sports betting is the hottest thing in the gaming industry right now, so it is no wonder that Caesars is going after William Hill. Since PASPA was overturned in 2018, 18 states plus the District of Columbia have launched sports betting markets and more states continue to look at legalization. With the recent return of all four major professional sports leagues in the U.S. plus college football, mobile and online betting has thrived, especially as people are still tending to stay home, rather than go to brick-and-mortar sportsbooks.