Caesars says US$3.7bil bid high enough for William Hill

Caesars power: Traffic on Las Vegas Boulevard in front of the Caesars Entertainment Inc. Caesars’ bid is 57.6% above William Hill’s closing price on Sept 1, the day before its first approach. —Bloomberg

LONDON: Caesars Entertainment Inc said William Hill Plc’s board would likely recommend its £2.9bil (US$3.7bil) takeover offer price, putting it on the front foot in a potential bidding war with Apollo Global Management Inc.

The British gambling company confirmed it received approaches from both US companies after Bloomberg reported Apollo’s interest on Friday.

Caesars’ bid is 57.6% above William Hill’s closing price on Sept 1, the day before its first approach.

Caesars’ power over an existing joint venture with William Hill “makes rival offers unlikely, ” said Goodbody analyst Gavin Kelleher. Some people may see Caesars’ offer price of 272 pence per share “as a somewhat disappointing outcome, ” he added.

William Hill shares fell 13% to 272.2 pence in early trading in London after soaring 43% on Friday.

Caesars and William Hill have a US joint venture with 20% and 80% equity ownership respectively.

The two were already in discussions about merging some of their operations in the United States, where the British bookmaker is looking to expand following the legalisation of sports betting by the Supreme Court in 2018.

Caesars said the joint venture “needs to be broadened in scope in order to fully maximise the opportunity in the sports betting and gaming sector.”

However, it warned it could pull out of some of the partnerships with William Hill if it loses the battle with Apollo.

That would risk blocking the British company’s access to the crucial American market.

William Hill’s home market of the UK has been hit with regulations like stake limits on betting machines – a rule which rendered hundreds of its stores unprofitable and led to 700 being closed.

Further tightening of UK gambling rules is being considered, while William Hill’s recent earnings have also been hit by Covid-19 shutdowns of sports events and the remaining stores.

Its market value has been eclipsed by European peers also shifting aggressively toward the United States and online gambling.

Hedge fund HG Vora Capital Management LLC owns around 8% of William Hill, having recently increased its holding, a source said.

Apollo made its initial written proposal for William Hill on Aug 27, then both the buyout firm and Caesars made further approaches, William Hill said in Friday’s statement.

Both suitors have until Oct 23 to announce they intend to make a firm offer or walk away under UK takeover rules. Apollo declined to comment.

The firm has a history of investments in the gambling sector. — Bloomberg

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