Analysis: William Hill remains patient over US merger after failed Caesars talks
Gambling Insider understands William Hill is still open to a US merger, after it held failed talks with Caesars Entertainment over a potential £6bn ($7.59bn) deal last year.
Both parties discussed the possibility of a cash-and-shares deal but talks ended due to a disagreement on price.
What remains unclear is whether Caesars was looking into William Hill or purely its US business, and why it was looking to form a partnership in the first place.
Caesars, which has 53 casinos in 14 states and overseas, had the potential to create a £6bn business, based on last Friday’s share prices.
Gambling Insider understands William Hill has held plenty of discussions in the US but is remaining patient over securing the right deal, whether that is with Caesars or another company.
This isn’t the first time William Hill has failed with takeover talks, having previously held discussions with The Stars Group and GVC Holdings, who have both gone on to secure deals of their own. The Stars Group acquired Sky Bet, while GVC completed the acquisition of Ladbrokes Coral.
In August 2016, William Hill turned down a bid presented by Rank Group and 888 Holdings, mainly due to its shareholders, who did not believe the deal held enough merit.
William Hill states it has a five-year-plan to grow its digital platform in the US and recently struck a deal with Eldorado Resorts. Eldorado owns 20% of William Hill’s American business, which indicates further talks may not entirely be off the table.
The US casino operator completed its deal to secure the 20% equity stake in William Hill for £38.1m ($50m) back in September 2018. The 25-year partnership has granted William Hill the right to operate online sports betting under the first skin to launch via Eldorado’s license.
In return, Eldorado was handed a 20% equity stake in the William Hill US business, alongside 13.4 million shares in the operator’s London-listed parent company.
Speaking back in September, William Hill CEO Philip Bowcock said: “Partnering with Eldorado gives William Hill access to one of the largest and most attractive casino footprints with 23 million customers across multiple states.
“Together, we are positioned to capture the evolving US opportunity – starting with land-based sports betting and extending to digital sports betting and, in some states, online gaming.”
Caesars previously held talks with Eldorado over a potential merger in March but nothing has yet to come to fruition. Gambling Insider understands William Hill is in favour of the two parties agreeing a deal.
It was widely speculated Caesars will now look to strike a deal with Eldorado, having failed to agree a lucrative deal with William Hill. Tilman Fertitta is also believed to still be interested in a form of M & A between Caesars and his Golden Nugget chain, having had a reverse merger offer rejected in November.
Speaking in March, Caesars’ largest individual shareholder, Carl Icahn, said: “I believe the best path forward for Caesars requires a thorough strategic process to sell or merge the company to further develop its already strong regional presence. I expect this to make Caesars the most powerful competitor in Vegas, the gaming capital of the world.”
Last month, Caesars reported a 7% year-on-year rise in revenue for Q1, to $2.12bn, amid a period of great organisational uncertainty.
William Hill reported a full-year loss of £687.9m before interest and tax at the end of March, while its adjusted operating profit was down 15% to £233.6m.
With the operator’s adjusted earnings per share falling 21% to 20.6p, it is clear to see why William Hill is seeking a US partnership, as it looks to expand its growth in this key market.
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