888 Holdings Agree £2.2bn Purchase Deal For William Hill International
888 Holdings has won the race to purchase William Hill International. The operator was favoured over Apollo Global Management and will pay £2.2bn to acquire William Hill’s non-US assets from Caesars Entertainment.
London-based operator 888 Holdings will be the new owner of William Hill’s International business after the brand owner Caesars Entertainment accepted a £2.2bn offer to buy.
888 believe the purchase will by 2025 generate pre-tax cost synergies of £100m.
The operator, in a statement, said the purchase would enable the enlarged group to benefit from scale advantage and would enable strong product and geographic diversification.
“With a focus on regulated markets, it will be able to offer customers world-class products, supported by leading betting and gaming brands, driving sustained growth and shareholder value creation over the medium and long-term,” 888 said.
William Hill’s UK assets are thought to have been one of the biggest drivers for 888 Holdings; the company is synonymous with sports betting in the UK. 888 states that they will gain “significantly enhanced” exposure to sports betting with this purchase.
The operator turned to JP Morgan, Morgan Stanley and Mediobanca to finance the deal, and this debt is in the form of £1.6bn in term loans and £500m in bridging loans and senior secured credit notes. Through these financiers, they also have access to a revolving credit facility of £150m.
888 has announced they will also conduct a £500m capital raising exercise via a share rights issue. The company’s long-term goal is to create a “more beneficial” capital structure for the business.
888 Holdings biggest shareholder with a 23% stake in the company, The Dalia Shaked Trust, has approved the deal. In addition, other interested parties, including Aberdeen Standard Investments and regular shareholders, who account for 24% of 888’s issued share capital, have offered unconditional support for the purchase.
The 888 board of directors have also approved the deal.
Despite the acceptance of the offer from Caesars Entertainment, the deal will still need regulatory approval. If this is granted, the company expect the process to complete in the first half of 2022.
Itai Pazner, 888’s CEO, saw the £2.2bn deal as a “transformational and hugely exciting” moment in the company’s history.
Pazner said: “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 are also excited about the opportunities that the retail business provides and see significant brand benefits to the enlarged group from its large estate,”
Although the company are excited that the deal will increase the company’s footprint in the UK, not all experts are convinced that the bricks and mortar side of the deal is good news for the operator.
Ivor Jones, an Ivor Jones for Peel Hunt said: “We intend to review our price target after the 10am meeting but any potential increase is likely to be moderated by the overhang of the equity issue,” Jones explained.
“If 888 could agree the sale of the shops and eliminate the equity issue, we would expect the share price to step up,” he said.
However, Regulus Partners analyst Paul Leyland welcomed the deal, saying: “While the strategy is compelling, execution will be the big test, especially since neither company has a great M&A track record (WH bought and largely destroyed Sportingbet’s Australian business, MRG was a regulatory melting ice cream, 888 mostly bought struggling versions of itself).
“Further, the recent momentum seen in the UK by both 888 and WH means that there is something positive to mess up.
“For Caesars, offloading the WHI assets for £2.2bn means that it paid a net £1bn for the US business. Given the need for strategic freedom on what will be a key battleground product for Caesars regardless of the revenue footprint, this seems a win-win deal at a highly attractive headline price,” On the announcement of the deal, 888’s share price