Caesars A Frontrunner In William Hill Bid

October 23, 2020

- Grant Whittington

With the written proposal deadline now at the door, the M&A race for British bookmaker William Hill is on fast approach for the final stretch. A race now turned competition between Las Vegas operator giant Caesars Entertainment and investments corporation and private equity titan Apollo Management International, the Vegas casino giant – incidentally already a 20 per cent shareholder in the bookmaker – has emerged the firm favourite so far by popular vote.

According to U.K. commercial takeover laws, written proposals in the form of firm intentions must be tabled by close-of-business on October 23, 2020. 

Mere Mention Spiked Value

Despite several challenges brought about by the global health crisis, William Hill earlier this year turned hot commodity because of its significant rise in the U.S. sports betting market. And it is precisely this position that will have prompted Caesars Entertainment to set its sites on acquiring full control of the British bookmaking behemoth.

A firm indication of public opinion – and perhaps even indicative of shareholder opinion from how markets have responded – has been the 7 per cent increase in the value of shares posted by Caesars shortly after the news regarding its intentions of acquiring William Hill broke into the public domain.

What will have further warmed Caesars to the idea of acquiring William Hill has been the bookmaker’s recent online drive, with the bookmaker having focused intensely on expanding its online offerings ever since former chief digital officer Ulrik Bengtsson got appointed CEO.

A U.K. Vs. U.S. Race

Even so, William Hill has not exactly been a company free of crisis. The bookmaker in August announced that it would not be re-opening a total of 119 of its high-street betting shops in the U.K. This after its high-street presence suffered several significant commercial knocks following government’s previous crack-down on FOBTs.

But the bookmaker’s native market aside, it’s 170 retail betting shops scattered across 13 U.S. states has kept the company competitive on the acquisition field. The only question demanding an answer right now is who gets to take control of a decades-long largely successful story. 

How The Odds Have Shifted

With Caesars Entertainment Corp.’s £2.9 million cash proposal now riding the high tide and the negotiations officially entered a critical stage, shareholders in both Caesars and Apollo will be waiting and hoping on a positive outcome – whatever that may mean in each individual scenario.

According to Caesars, its own tabled acquisition offer represents a valuation of William Hill at a rate of 272 pence for a share – being at the time of the initial tabling a 25 per cent premium hike over the closing price at that time. Then came the news of William Hill’s shares having closed at a much-higher 312.20 pence only a day later. Caesars had suddenly turned the number one runner at the front.

The dynamic has however changed since those initial post-acquisition-news days, with many now left speculating over what more recent fluctuations may mean in terms of Caesars’ eventual prospects of success.

Caesars’ Coin Has A Flip Side

Following a levelled-out 280p/per share William Hill value performance on the markets, Caesars’ bid may actually eventually be regarded an undervaluing threat by William Hill shareholders. Or in simple terms, the actual market value may ultimately prove the undoing of Caesars’ entire offer, which in turn, would necessarily allow bidders to enter the acquisition picture.

That several hedge funds have also now started acquiring shares in the bookmaker at prices above the initial offer level by Caesars Entertainment Corp. is further indication of everything not exactly going according to plan for the Vegas operator.

Time remains the judge and jury.

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