Finance

Caesars reaches agreement on William Hill acquisition

4 minutes read
US gambling giant Caesars Entertainment Inc. has agreed terms on a deal for its Caesars UK Holdings subsidiary to acquire the entire William Hill business for approximately £2.9bn (€3.17bn/$3.72bn).

Terms of the deal, which were set out earlier this week, will see Caesars pay 272 pence for each William Hill share, having finalised its due diligence in relation to the offer.

The acquisition remains subject to approval by William Hill shareholders, but the bookmaker’s board has said that it considers the terms of the deal to be “fair and reasonable”, and will recommend both unanimously and unconditionally that the offer be accepted.

“The William Hill board believes this is the best option for William Hill at an attractive price for shareholders,” William Hill chairman Roger Devlin said.

“It recognises the significant progress the William Hill Group has made over the last 18 months, as well as the risk and significant investment required to maximise the US opportunity given intense competition in the US and the potential for regulatory disruption in the UK and Europe.”

Caesars’ chief executive Tom Reeg added: “The opportunity to combine our land based-casinos, sports betting and online gaming in the US is a truly exciting prospect.

“William Hill’s sports betting expertise will complement Caesars’ current offering, enabling the combined group to better serve our customers in the fast growing US sports betting and online market.”

Should the acquistion be completed, the deal will effectively see the William Hill business broken up, with Caesars to seek buyers for all non-US operations, including its British business, in order to maintain a strategic focus on the US. 

Though Caesars accepted William Hill’s GB and non-US international businesses have a “strong future”, in order to support these operations moving forward, Caesars said new owners with longer-term ambitions would be more suitable to run these businesses.

Caesars and William Hill already have a joint presence in the US through a joint venture agreement struck by Eldorado Resorts, which extended to all legacy Caesars properties following the casino operators’ mega-merger. This sees William Hill run online sports betting operations through Caesars’ market access in certain states, as well as retail sports wagering in Caesars’ properties across the US.

William Hill has an 80% equity ownership in the venture, with Caesars holding a 20% interest, and the two businesses have been putting plans in place to roll out sports betting operations in additional Caesars properties, in anticipation of the acquisition going through.

By joining forces, Caesars said the William Hill US business would significantly benefit in a number of ways, better serving customers, increasing its market access and providing a more unified customer experience by consolidating applications and wallets.

Other major benefits, Caesars said, include having a “world class” portfolio of assets, the ability to access Caesars’ pre-existing relationships with sporting teams and events, as well as greater alignment with media companies

Together with online gambling, which is currently outside the scope of the joint venture but would be brought into the combined business, Caesars said that the enlarged operation could generate up to $700m in net revenue during the 2021 fiscal year.

Caesar’s CEO Reeg said: “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.”

However, Caesars also warned that if William Hill were to agree to an acquisition offer from investments giant Apollo Global Management – a former owner of the legacy Caesars business – it would terminate mobile market access rights and rights to operate sportsbooks at its casinos that were granted through the Eldorado partnership.

Last week, both Caesars and Apollo out forward separate cash proposals with the aim of acquiring the entire William Hill business, but the board’s recommendation shows the casino operator has the upper hand.

The acquisition talks come towards the end of a historic year for Caesars, which in July saw its legacy Caesars Entertainment Corporation business acquired by Eldorado Resorts, in a reverse merger deal that the operators said created the largest casino and entertainment business in the US.

Eldorado agreed to pay $17.3bn – comprising $7.2bn in cash and around 77m Eldorado common shares – to acquired Caesars, with the combined business now operating as Caesars Entertainment Inc.

Last month, Caesars Entertainment Inc. reported a $1.17bn net loss for the first half of the year.

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