888 Holdings gets discount on William Hill acquisition
Caesars Entertainment has agreed to lower its valuation of William Hill’s European assets.
UK.- The board of the UK gambling group 888 Holdings has announced an agreement for a reduced price on its acquisition of William Hill‘s European assets. It’s gained a £250m cash reduction, £100m of which will be kept as a 2024 earnout incentive depending on EBITDA performance.
888 said the seller, Caesars Entertainment, had agreed to lower its enterprise valuation of William Hill from £2.2bn to between £1.95 and £2.05bn due to a change in macroeconomic conditions and regulatory compliance factors since the original deal was made in September 2021. It still expects to finalise its takeover of William Hill by the end of H1 trading.
The reason for the reduction in value is a Gambling Commission licence review, which 888 believes will result in losses for William Hill.
It said in an update: “Following a compliance assessment conducted in July and August 2021, the William Hill Group is subject to an ongoing licence review and is addressing certain action points raised by the UKGC in relation to WH’s social responsibility and anti-money laundering obligations.”
Caesars has agreed to put William Hill, Mr Green and other UK licensed entities under an Indemnity Deed to compensate 888 for any negative regulatory consequences.
The board of 888 has also updated its funding options for the deal and expects to generate proceeds of £500m in a private investor bookbuild. It will issue up to 70 million new shares, which is about 19 per cent of its total issued share capital.
It said: “The board continues to believe the acquisition has highly compelling strategic and financial benefits, with the current macroeconomic environment and changing market conditions across its key markets only serving to strengthen the rationale for bringing together two highly complementary businesses and combining two of the industry’s leading brands.
“Alongside the strategic benefits, the combination of 888 and WHI is expected to deliver significant operating efficiencies, including pre-tax cost synergies of at least £100m.”
