So, what happens now with William Hill?
Mike Deasy on a likely purchase of William Hill by Caesars Casinos and what happens next for the British business
Casino operator Caesars Palace appear to be in the driving seat to acquire UK bookmaker William Hill. A bid of £2.9bn, or 272p per share, has found favour at Hills, albeit that some commentators think they should have held out for more, particularly as there is another known bidder in the offing, US-based private equity concern Apollo Global Management.
So, why the American interest in a British bookie which has struggled in its home market in recent years?
The answer is that it has made a big impact in the US since sports betting became legal after a Supreme Court judgment in 2018 that meant betting could take place across the country and not just in the state of Nevada.
Hills soon built up a healthy US market share, transferring its online skills from the European market to the States, where domestic operators had little experience of online betting or of offering sports odds. It now has nearly 30% of the US market.
One of the US deals which Hills secured was a tie-up with Caesars, who consequently acquired 20% of the Hill’s US operation, where Hills are their preferred choice for offering sportsbook odds at their 50+ casinos.
Should Caesars fail to acquire William Hill, they will walk away from that arrangement, making quite a dent in the appeal of Hills to other potential buyers. The shrewdies are saying that Hills would be sensible to accept the bid.
But what Caesars have said is that they will divest themselves of the UK business. Similarly, Apollo have said they are only interested in acquiring the US business.
What happens in the UK
So, if as seems likely, Caesars win the battle for Hills, the next question is who will want the UK arm?
These scribblings noted some months ago that the 6% of Hills shares purchased by the Done brothers, owners of the private company Betfred, was an indication they could be interested in acquiring more.
That continues to look like a distinct possibility. Whilst Hills priorities did not lie with its retail estate – they were the quickest to close shops after restrictions on FOBT maximum stakes and during lockdown – Fred Done still champions betting shops.
It’s hard to see any other betting firms with an inclination to expand being able to put in an offer unless they got some financial backing from someone who wanted to get involved in bookmaking and saw the merit of using an existing player to provide some leverage to get Hills back in gear.
The other possibility is an equity finance firm making the necessary investment to beef up the Hills UK business with an eye on a future sale at a premium price.
In the interim, we’ll have to wait and see if Caesars can close the deal and then watch what happens to one of the biggest names in British bookmaking.
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