888 agrees £2.2bn deal to acquire William Hill assets from Caesars

888 revealed this week that it was in “advanced” talks with Caesars over a potential deal and has now confirmed it has reached an agreement that, if finalised, it said would create a global online betting and gaming leader. The acquisition will also see the online-only 888 move into the retail channel for the first time, should it retain the William Hill retail estate.

The operator said the acquisition represents a “transformational opportunity” for the group to increase its scale and further diversify its product offering, adding that on a pro-forma basis, revenue from the combined group in 2020 would have been $2.5bn.

888 added that should the deal go through, it expects the acquisition to deliver substantial value creation for shareholders from pre-tax cost synergies of at least £100m per year, along with potential revenue upside from enhanced customer proposition and product offerings. 

“The acquisition of William Hill International is a transformational and hugely exciting moment in 888’s history,” 888 chief executive Itai Pazner said. “This transaction will create one of the world’s leading online betting and gaming groups with superior scale, exceptional brands, increased diversification, and a platform for strong growth.

“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.”

To fund the deal, 888 secured approximately £2.1bn in fully committed debt financing from JP Morgan, Morgan Stanley and Mediobanca, including £1.6bn of term loans and £500m of bridge loans/senior secured notes.

888 also obtained a fully committed revolving credit facility of £150m and will seek to raise £500m by issuing new equity via a capital raise at a later date.

As the acquisition is classed as a reverse takeover, it remains subject to a host of approvals, including the backing of shareholders. 888 said it has already secured the backing of its largest shareholder, its founders’ Dalia Shaked Trust, which holds a 23% stake in the operator.

888 said it also had expressions of support from several other of its largest shareholders, which together hold approximately 24% of the issued share capital of 888, including its largest institutional shareholder in the form of Aberdeen Standard Investments.

Aside from shareholder approval, 888 and Caesars must also secure the backing of the UK Financial Conduct Authority, relevant gaming-related approvals, anti-trust approval and also finalise an agreement with Caesars over the restructuring of the William Hill US and non-US businesses.

Subject to satisfying all of these conditions, 888 hopes to complete the purchase during the first half of 2022.

“We have been incredibly impressed with the William Hill management team, and I look forward to working with them and the wider William Hill team to create great products for our customers, driven by best in class technology, powerful brands, and benefitting from our significantly enhanced scale,” Pazner added.

Founded in 1934, William Hill was primarily focused on the British market before expanding into other markets around the world, including the US. The William Hill International business covers all operations outside of the US, including Great Britain, Spain, Italy and the Nordics.

In 2020, William Hill International’s revenue amounted to $1.12bn, split £803m for online and £354m for retail, while its adjusted earnings before interest, tax, depreciation and amortisation was £157m.

“The William Hill and 888 strategies are highly complementary with an absolute focus on the product and customer experience,” William Hill International chief executive Ulrik Bengtsson said. “Scale is increasingly important in our sector and the combination of the businesses will provide a powerful alignment of brands and technology. 

“This transaction is a testament to the progress William Hill has made over the last two years, our unrelenting focus on customer, team and execution and, most importantly, the dedication and commitment of William Hill colleagues.”

The William Hill International business currently operates under Caesars, which acquired the entire William Hill group in April of this deal in a deal worth £2.9bn. However, Caesars had made clear the primary target of the purchase was William Hill’s US business and said that it would seek to sell the International division.

Caesars in May said it was to begin the process of selling off William Hill’s non-US assets over the summer, with the aim of finding a buyer and completing the sale within one year.

Though Caesars did not disclose the identity of any parties it was speaking with, reports said both Apollo Global Management and CVC Capital Partners were interested, but the latter is believed to have recently withdrawn from the process.

Caesars chief executive Tom Reeg said: “I’d like to personally thank Ulrik and all of the team at William Hill for their professionalism and dedication while they have been part of Caesars and particularly during the sale process.  

“I am delighted that, as we said we would when we announced the offer for William Hill, we have found an owner for the William Hill business outside the US which shares the same objectives, approaches and longer-term ambitions of that business.”