Caesars Entertainment has outplayed its rival Apollo by sealing a $3.7 billion cash takeover deal with betting operator William Hill.
The deal to acquire the UK-based sports betting operator is part of Caesars’ bid to expand across the United States. According to reports, Caesars plans to sell William Hill’s international operations, including 1400 betting shops in the UK. Nevada-based entertainment company insists that William Hill’s US operation will be incorporated into Caesars without any drastic changes. There will also be minimal job losses, if any.
Earlier this month, there were reports that Apollo, a New York-based investment management company, was also keen to purchase William Hill. However, the casino giant Caesars eventually managed to seize the opportunity despite tough competition from Apollo. The deal is likely to close in the second half of the next year, pending regulatory approvals.
While commenting on the latest development, Caesars Entertainment CEO Tom Reeg said, “The opportunity to combine our land-based casinos, sports betting operations, and online gaming in the United States is a truly exciting prospect.”
Expanded Partnership After Caesars-William Hill Takeover
Even before this mammoth deal, the two transatlantic companies were already operating a US sports betting joint venture, but Caesars wanted to expand the existing partnership to maximize its potential. The combined sports betting and digital business could produce up to $700 million in net revenue in FY2021. The US giant could potentially spin this out on its own.
The agreement also initiates a second merger and acquisition process, as Caesars now looks to sell William Hill’s non-US business. It made up 93% of group revenues in the first half of this year. According to Caesars, it intends to find suitable partners or owners “who will be eying the longer-term ambitions of those business and for the benefits of its customers.”
The available assets include William Hill UK online, the UK retail estate, and the international part of the operations. According to The Times, Betfred has expressed keenness in the retail estate.
It has been a busy year for Caesars as it also recently completed a merger with Eldorado Resorts and shows no sign of slowing down its further expansion.
The Best Option for William Hill
It is indeed the most viable option for William Hill, as its chairman Roger Devlin acknowledged. He said, “The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders.”
“It acknowledges the considerable progress the William Hill Group has made over the last 18 months, besides the risk and significant investment needed to maximize the US opportunity given the tough competition in the US and the potential for regulatory disruption in the United Kingdom and Europe.”
Benefits for Caesars
In a statement, the US casino giant lait out its reasons for the takeover, including:
- Broader market access
- Unified customer experience across their sportsbook and online casino
- Improved attractiveness as a potential partner for media companies
- The chance for William Hill to cross-sell to 60 million customers in Caesar’s rewards database
The $3.7 billion offer marks a 58% premium to William Hill’s share price the day before Caesars made the offer. Caesar’s share price was up 3% to $56 in pre-market trading after this news.