Caesars cements $3.74bn takeover bid for William Hill
Casino giant confirms intention to offload Hills’ non-US assets if multi-billion-pound deal completes
US casino operator Caesars Entertainment is in advanced talks with William Hill over a $3.74bn (£2.9bn) mega-merger.
Caesars’ all-cash offer was based on a 57% premium of Hills’ share price at the start of September, representing a potential offer price of $3.51 (272p) per share.
Caesars has already finalized due diligence on the multi-billion-pound tie-up, which it suggests could close as soon as the second half of 2021.
“The William Hill board of directors has indicated to Caesars that the possible cash offer is at a price level that they would be minded to recommend to William Hill shareholders,” Caesars said in a statement.
Reports of a possible merger between the two businesses, which already power a US-facing joint venture together, first surfaced on Friday, prompting Hills to confirm the presence of rival bids from both Caesars and private equity firm Apollo Global Management.
Under the terms of the JV, William Hill owns 20% of the business, while Caesars owns the remaining 80%.
Caesars has threatened to terminate the pair’s US JV should the operator partner up with Apollo.
Caesars is keen for the US JV to be broadened in scope beyond just sportsbook, and that any merger would see online gaming expand the partnership.
The casino giant said the combined business could generate $600-$700m (£468m-£547m) in net revenue for the 2021 financial year.
“The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect,” Caesars Entertainment CEO Tom Reeg said.
“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,” he added.
William Hill declined to comment further on either bid when approached by EGR. Hills’ share price dropped 12% in early trading on the London Stock Exchange to 273.70p after surging 37% on Friday following confirmation of merger discussions.
To fund its all-cash offer, Caesars revealed it would conduct a capital raising exercise as well as utilize existing cash reserves.
Caesars has commenced an underwritten public offering of more than 30 million shares in its business, as well as giving its bookbuilders, Deutsche Bank Securities and J.P. Morgan a 30-day option to purchase a further 4.5 million shares.
It also plans to take out more than $2bn (£1.5bn) in debt facilities secured against Hills’ non-US business.
Caesars said its strategic focus will remain on the “opportunities immediately evident” in the US market and hinted at a potential sale of William Hill’s international business, which is primarily comprised of a large retail portfolio in the UK and a European online gaming arm in Mr Green.
“In order to best maximize those propositions and support those businesses’ long-term ambitions following completion of the acquisition of William Hill, Caesars’ intention is to seek suitable partners or owners who have aligned objectives and approaches and who will be focused on the longer-term ambitions of those businesses and for the benefit of its customers,” the US casino operator said.
The lesson from the soon-to-be-bidding-war for $WMH.N is that the lowest cost of capital finds a way. If WMH had relisted the US biz faster and gotten a $DKNG-like valuation they would be predator, not prey, now.
Everything in the UK listed space is a target right now https://t.co/VnFUPJYopv
— Jeremy Raper (@puppyeh1) September 25, 2020
Betfred owner Fred Done could potentially be one party interested in acquiring Hills’ retail portfolio having already purchased a 4% stake in the London-listed bookmaker.
Caesars Entertainment operates 54 casinos in 16 states, with more than 64,000 slot machines and 3,000 table games.
Hills currently operates 12 sportsbooks through Caesars properties across the US, but that number is set to rise to 29 as sportsbooks from Caesars’ newly merged Eldorado Resorts business are migrated.