Caesars Entertainment is set to complete its $3.7 billion acquisition of William Hill on Thursday following a UK court’s ruling earlier this week. On Tuesday, the High Court of Justice in England and Wales approved the deal. Court approval was required after a minority shareholder disputed the deal that was initially set to close on April 1. As the court dismissed the arguments of the contesting companies, HBK Capital Management and fellow US hedge fund GWM Asset Management, the deal is now set to close by Thursday.
Currently, William Hill is publicly traded on the London Exchange, while the Nevada-based Caesars is traded on the NASDAQ. Once the deal is closed, William Hill will be delisted in the UK. Interestingly, William Hill’s share price fell 2% on the court ruling.
Why Did HBK Oppose the Deal?
HBK opposed the $3.7 billion deal, claiming the terms of an existing joint venture between the two entities were not adequately disclosed. It said that shareholders had voted on the scheme without the information they required to judge the merits of the takeover. William Hill had dismissed HBK’s allegations, maintaining that the document gave all the necessary information. Also, according to Third Bridge analyst Harry Barnick, the underlying objective for the HBK was to extract a better offer in case the court ruled in its favor: “The hope was that if the courts sided with these hedge funds, Caesars may be forced to improve its offer.”
Private equity firm Apollo had also indicated interest to acquire William Hill but then withdrew. The Nevada-based casino and hotel company had threatened to terminate its joint-venture if the deal failed, in a move to preempt other bidders.
How Have We Reached Here?
In 2020, Caesars Entertainment successfully acquired its partner William Hill in a $3.7 billion following a threatening bid to terminate its joint ventures with the UK firm if Apollo acquires William Hill. It helped William Hill take a prompt decision on September 30. The process took a step further when in November William Hill PLC announced shareholders gave nod to the deal by “requisite majorities”. At that time, the plan was to close the transaction by March 2021.
When the deal was struck last September, the two entities were already partners, with Caesars owning 20% of William Hill US, and with the British company was in about a dozen Caesars casinos across several states at that time. Undoubtedly, Caesar’s acquisition is part of its expansionist plans to position itself as one of the leading players in US sports betting.
William Hill US is based in Las Vegas, with Joe Asher as the CEO of the American portion of the operation. It is likely that most Caesars properties in the US will now feature William Hill sportsbooks. The US casino operator plans to sell William Hill’s all non-US businesses, including over 1,400 betting shops in the UK. It is rumored that the company will spin out the combined digital sports betting and gaming business and list it in the US, and could generate up to $700 million in pro forma net revenue in FY 2021.