Paying a premium

Well that was fast. Just two days after Caesars Entertainment confirmed that it was in “advanced talks” to acquire London-based bookmaker William Hill, the deal got done. On Wednesday, the companies announced that Caesars has purchased William Hill for £2.9 billion ($3.7 billion). Caesars paid 272p ($3.52) per William Hill share, a 58 percent premium over William Hill’s share price on September 1, which is the day before Caesars made its initial offer.

To finance the deal, Caesars will use about $1.3 billion in cash it already has, which includes $900 million taken from a revolving credit line, and raise another $1.7 billion from a stock placement.

Of course, that leaves several hundred million. Caesars’ primary target is William Hill’s U.S.-based sportsbook business, as legalized sports betting is expanding rapidly across the country. As such, it has no desire for the company’s non-U.S. assets and plans to sell them off. Caesars expects to fetch around $2 billion for that piece.

Caesars, William Hill already had a relationship

“The opportunity to combine our land-based casinos, sports betting and online gaming in the U.S. is a truly exciting prospect,” Caesars Entertainment CEO Tom Reeg said in a press release. “William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing U.S. sports betting and online market.”

Though William Hill also had an offer from private equity firm Apollo Management, one thing that helped Caesars’ cause (aside from it being a casino company) is that it already owned 20 percent of William Hill US. That portion came from Eldorado Resorts, which merged with Caesars this summer. Eldorado got it when it signed a 25-year deal to make William Hill its sportsbook operator.

“The William Hill board believes this is the best option for William Hill at an attractive price for shareholders,” said William Hill chairman Roger Devlin in Wednesday’s announcement. “It recognizes the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximize the U.S. opportunity given intense competition in the U.S. and the potential for regulatory disruption in the U.K. and Europe.”

Betfred eyeing William Hill’s UK business

As mentioned, Caesars Entertainment plans to quickly turn around William Hill’s non-U.S. assets. According to reports, a likely buyer for William Hill’s UK betting shops is Betfred, owned and founded by brothers Fred and Peter Done. Betfred owns 6.1 percent of William Hill, about half of it accumulated several months ago, when the COVID-19 pandemic resulted in global shutdowns, decimating the land-based gaming industry.

Fred Done bought up William Hill shares at a measly 36p ($0.47) per share. With the 272p per share takeover price, he is making £170 million ($220 million) from the sale of William Hill.

William Hill’s business has taken a beating in the last year-plus. A combination of regulatory changes and the pandemic has resulted in the company closing over 800 betting shops in the UK. It has about 1,400 retail betting shops remaining.

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