Caesars wins race for William Hill in $3.7bn deal
US casino giant to consolidate apps, payment wallets and media partnerships with UK bookie as Hills chairman Roger Devlin pledges to keep employees informed
Caesars Entertainment has won the race to acquire William Hill after the two US sportsbook partners reached an agreement on a $3.7bn (£2.9bn) all-cash deal.
The deal values William Hill’s stock at a price of $3.50 (272p) per share, representing a premium of 57% on the closing price of the business as of September 1.
“The William Hill directors, who have been so advised by Barclays, Citigroup and PJT Partners as to the financial terms of the acquisition, consider the terms of the acquisition to be fair and reasonable,” William Hill said in a statement on Wednesday morning.
The board has said it will recommend to shareholders to accept the offer.
“The William Hill board believes this is the best option for William Hill at an attractive price for shareholders,” William Hill chairman Roger Devlin said.
“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 US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe,” Devlin added.
The newly combined company’s market access across the US will be increased and is set to benefit from a broad network of sportsbook locations.
Caesars has said it will look to provide a “more unified customer experience” by consolidating apps and wallets, and by allowing a “more focused branding experience.”
The casino operator is also keen to align media deals to boost customer acquisition. Caesars has partnered up with ESPN while William Hill is involved with CBS Sports.
The Caesars bid, alongside a rival offer from private equity firm Apollo Global Management, was first revealed last week.
At the time, Caesars asserted that its US joint venture with William Hill would be terminated if the operator looked to proceed with Apollo, giving the casino giant some serious leverage.
“For now, it is very much business as usual. Employees will be kept fully informed through this process,” said Devlin.
“In terms of our UK and International businesses, we believe they have a strong future ahead and we will work with Caesars to find suitable partners to further the long term growth prospects of these businesses,” he concluded.
Caesars will look to split William Hill’s prized US assets from its wider international operations following completion of the deal, which could lead to several separate sell-offs to potential suitors.
“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.
“We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment,” Reeg added.
Prior to the tie-up, Caesars and William Hill operated a US joint venture with 20% and 80% equity ownership respectively across online and retail sports betting.
Once online gaming is also included in the soon-to-be-permanent partnership, Caesars estimates the enlarged US business could generate $600-$700m in net revenue for the full-year 2021.
Caesars yesterday issued a public offering of 31 million shares at $56 a share to fund its takeover of William Hill. The operator is expecting to raise around $1.7bn.
UK-based industry analyst firm Regulus Partners this morning put out a note on the tie-up, stating: “There are still serious question marks over market structure and achieving underlying profitability, especially in states without online gaming.
“Perhaps more importantly, while WH is proven in delivering traditional US retail (or retail-led) solutions (which the host casino typically dominates the economics of whether in-house or not), its digital delivery is far more patchy and not so clearly in-house (in the US and in UK/European markets),” the note said
“Caesars therefore risks buying an operationally sub-optimal business to deliver on a strategic vision that is still nascent (at best), in our view. More broadly, the deal also underlines the paucity of strong M&A opportunities to convert US potential (even under the hype) into tangible (and market-satisfyingly rapid) reality.”