888 confirms £2.2bn William Hill deal
After reports emerged earlier in the week, the online gaming operator 888 Holdings has confirmed it has reached a deal to buy William Hill’s European business.
UK.- The online gambling operator 888 Holdings has confirmed that it has reached a deal to buy William Hill’s European business from Caesars Entertainment for £2.2bn.
It had already emerged that 888 looked likely to win the auction, having beaten bids from rival contenders including US private equity fund Apollo Global Management with an offer well over the predicted £1.5bn sale price.
If the deal gains approval, it would see 888 quadruple its market share to take bet365’s position as the third-largest gambling group in the UK behind Flutter Entertainment and Entain.
It will expand 888’s online presence with Williamhill.com and Mrgreen.com but also see the operator enter the land-based betting sphere for the first time if it chooses to hold on to William Hill’s UK betting shops.
A “transformational moment”
The operator said the deal was a “transformational” opportunity to build scale. It said that on a pro-forma basis, the combined group’s revenue in 2020 would have been $2.5bn. It said that the acquisition would create value for shareholders with pre-tax cost synergies of at least £100m per year.
Chief executive Itai Pazner said: “The acquisition of William Hill International is a transformational and hugely exciting moment in 888’s history. This transaction will create one of the world’s leading online betting and gaming groups with superior scale, exceptional brands, increased diversification, and a platform for strong growth.
“William Hill is an iconic sports brand, making it the ideal complement to 888, one of the leading global online gaming brands. Our strategies are also complementary, being digitally led, customer focused, and committed to player protection and raising industry standards around safer gambling.
“We have been incredibly impressed with the William Hill management team, and I look forward to working with them and the wider William Hill team to create great products for our customers, driven by best in class technology, powerful brands, and benefitting from our significantly enhanced scale.”
The deal will be funded through £2.1bn in fully committed debt financing from JP Morgan, Morgan Stanley and Mediobanca, including £1.6bn of term loans and £500m of bridge loans/senior secured notes. 888 will also look to raise £500m by issuing new equity.
888 hopes to complete the acquisition in the first half of 2022, but, as a reverse takeover, it will need several approvals, including that of shareholders. It will need antitrust approval and the green light from the UK Financial Conduct Authority.
The operator says it already has the support of its largest shareholder, the Dalia Shaked Trust, and other major shareholders.
William Hill International chief executive Ulrik Bengtsson said: “The William Hill and 888 strategies are highly complementary with an absolute focus on the product and customer experience. Scale is increasingly important in our sector and the combination of the businesses will provide a powerful alignment of brands and technology.
“This transaction is a testament to the progress William Hill has made over the last two years, our unrelenting focus on customer, team and execution and, most importantly, the dedication and commitment of William Hill colleagues.”
The US casino giant Caesars Entertainment acquired William Hill for £2.9bn in April as it seeks to expand in the US sports betting market, but made clear early on that it would sell the company’s European business.
Caesars chief executive Tom Reeg said: “I’d like to personally thank Ulrik and all of the team at William Hill for their professionalism and dedication while they have been part of Caesars and particularly during the sale process.
“I am delighted that, as we said we would when we announced the offer for William Hill, we have found an owner for the William Hill business outside the US which shares the same objectives, approaches and longer-term ambitions of that business.”
The future of William Hill’s UK retail betting shops
Founded in 1934, William Hill was originally focused on its UK retail network, which is currently still the largest in the country with 1,400 betting shops.
Several players may now be interested in buying those from 888, an operator that has no experience in the land-based sector. Betfred founder and CEO Fred Done has expressed interest, while Irish bookmaker BoyleSports, the biggest rival, has also expressed an interest in acquiring at least some of William Hill’s assets as it continues to expand its estate.
However, while it hasn’t said anything concrete, 888 Holdings has said that it wants to use the acquisition to diversify, suggesting it may hold on to William Hill’s retail estate in order to enter a sector that’s been hit hard by the Covid-19 pandemic and regulatory changes on fixed-odds betting terminals but could face less scrutiny in the UK’s ongoing review of gambling legislation.
