Caesars Entertainment in William Hill Takeover Bid Worth £2.9 Billion

William Hill LogoBritish bookmaker William Hill appears to be at the centre of a takeover battle, with US-based Caesars Entertainment the most likely to come out on top. It has been revealed that both Caesars Entertainment, which owns numerous casinos and hotels in the United States of America, including Caesars Palace in Las Vegas, and a private equity firm called Apollo have both expressed an interest in buying the company.

Caesars Entertainment has confirmed that it is in ‘advanced takeover talks’ believed to be worth about £2.9 billion. The interest in William Hill comes as online betting companies have benefitted from various lockdowns around the world as a result of the recent health crisis. William Hill is also one of the companies that has positioned itself well to take advantage of the 2018 Supreme Court decision to allow betting in US states.

Two Companies Approach William Hill

Businessmen Tug of War

Whilst all of the attention in the takeover battle is being given to Caesars Entertainment, the private equity firm Apollo has also approached the British bookmaker with an offer. Apollo is a company that has been in the news in the United Kingdom in recent weeks because it was one of two companies that Walmart is reportedly choosing between regarding the sale of the Asda supermarket chain.

Lone Star, Apollo Global Management and TDR Capital were all looking to buy Asda from Walmart, with Lone Star dropping out of the running. Many believe that the offer from Apollo will prove the most attractive, though the same is not true when it comes to their attempts to buy William Hill. Whilst there offer a good one, there is already an arrangement in place between the bookie and Caesars Entertainment.

Caesars owns a 20% stake in William Hill’s operations in the United States of America, giving the bookmaker exclusive rights to operate its sports betting operation under the banner of Caesars Entertainment. The company has suggested that the arrangement between the pair would come under threat if William Hill were to chose the bid from Apollo Global Management over the one from Caesars.

A ‘Truly Exciting Prospect’

USA Flag Against Blue Sky

William Hill has worked hard in recent years to position itself strategically when it comes to the American market. With the Supreme Court having struck down the Professional and Amateur Sports Protection Act in 2018, the US market has become an extremely attractive one. William Hill have one hundred and seventy retail sites across thirteen states, with online betting also likely to take off there.

As a result, the Chief Executive of Caesars Entertainment, Tom Reeg, said, “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.”

Share Prices Soared

William Hill Share Price September 2020

When William Hill confirmed on Friday that it had received two separate takeover approaches, the company’s share prices went up significantly. There was a 42% rise, putting the shares’ worth at 312 pence. Caesars confirmed that the offer they put to William Hill was nearly 58% higher than the company’s share price the day before they approached the bookmaker for the first time on September second.

Meanwhile, the Chief Investment Officer For Equities at Aviva Investors, David Cumming, believes that the offers for William Hill could actually end up outstripping the 312 pence level that the shares ended at when trading closed on Friday. The share price fell to 272 pence when trading re-opened on Monday, with that being the offer that Caesars Entertainment have made after looking at William Hill’s books.

Speaking to the Today programme on the BBC, Cumming said, “The view is – and we do hold some William Hill so it [has] some interest here – the 40% rise on Friday, given comparative valuations in the US, it is possible that the bid comes in at a higher level than the closing price we saw then so there still might be some upside.” He also said that Caesar Entertainment’s 20% share of William Hill meant they had some ‘synergies’.

It’s A Good Offer From Hill’s Point Of View

Business People Agreeing Deal

William Hill has suffered some poor returns in recent years. The British government’s decision to impose a maximum stake on Fixed Odds Betting Terminals was believed to be the cause behind the company lodging pre-tax losses in both 2018 and 2019. On top of that, the recent global health crisis has hit the company hard, with all of their UK-based branches having to close their doors during the lockdown in the country.

In fact, the cancellation of numerous sporting events around the world had such a big effect on William Hill’s profits that the company confirmed back in August that nearly one hundred and twenty of its stores would not be re-opening. It is not believed that customers will return to the high street shops in the same numbers as they did prior to the pandemic hitting and the government’s reactionary lockdown.

That being said, William Hill is still an attractive proposition for the likes of Caesars Entertainment because of its position in the United States market. On top of that, the online side of the business benefitted from the physical stores being shut and trading has improved in recent weeks. Though talks are still ongoing, if an offer is accepted it’s believed the deal will be completed in the middle of next year.