Caesar’s Entertainment to acquire William Hill for an eye-watering £2.9bn
Caesar’s Entertainment and William Hill have agreed in principle to a £2.9bn ($3.8bn) acquisition that will see Caesar’s take over control of William Hill.
If the deal was to go through, Caesar’s Entertainment would become one of the largest gaming operators in the world with an incredibly diversified portfolio of provisions.
William Hill, on the other hand, is already one of the leading betting/gambling corporations in the UK market, so this deal will likely see the two firms expand further into the U.S market.
As it stands, the proposed agreement will see Caesars UK offer 272p for each of William Hill’s shares, representing a 25% premium on the closing price of the shares as of 24th September 2020. The deal will be put to the votes of shareholders at a general meeting and will need the support of 75% of shareholders in order to be successful.
Caesars also suggested that this joint venture with William Hill could generate revenue of anywhere between $600-700m over the next financial year, considering the general growth predictions for the whole industry by 2022.
CEO Tom Reeg described the “opportunity to combine our land-based casinos, sports betting and online gaming in the US” as a “truly exciting prospect”, and further added:
William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to serve our customers in the fast-growing U.S. sports betting and online market. We look forward to working with William Hill to support future growth in the US by providing our customers with a superior and comprehensive experience across all areas of gaming, sports betting, and entertainment.
The chairman of William Hill, Roger Devlin, echoed Reeg’s comments:
The William Hill Board believes this is the best option for William Hill at an attractive price for shareholders. It recognizes the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximize the US opportunity given the intense competition in the US and the potential for regulatory disruption in the UK and Europe…It is one of the most recognized brands globally. Over recent years, it has transformed from a business once heavily reliant on UK retail into a company that is truly diversified by geography and channel, providing a stable standalone platform for future growth.
William Hill plc was trading at 273.90 pence per share in London early on Wednesday 7th, while shares in Caesars Entertainment Inc closed 6.34% lower at 54.49 per share on Tuesday 6th.
The acquisition gives both firms a boost in a tough market
This agreement has benefits on both sides of the Atlantic. William Hill has faced an uphill struggle recently due to the Covid-19 pandemic. In August, they announced the closure of 119 of their 1,500 UK stores following a challenging period that saw the coronavirus wreck havoc on advertising revenues, while boosting the Pay N Play online casinos sector. As the chairman stated, this new agreement is likely part of a new strategy that will see the company expand further globally.
Equally, Caesars also saw their profits fall in the first half of the year as a result of the casino closures due to the pandemic restrictions. They are looking to build back by expanding further into a US market that has exploded recently due to a relaxation of gambling legislation in many states – with experts estimating the industry to now be worth $30-35bn.