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

[LONDON] Caesars Entertainment said William Hill's board would likely recommend its US$3.7 billion takeover offer price, giving it an edge over rival suitor Apollo Global Management.

The British gambling group confirmed it received approaches from both US companies after Bloomberg reported Apollo's interest on Friday. William Hill shares fell 12 per cent to 273.7 pence as of 9.13 am on Monday as investors reined in expectations of a hefty counterbid by the private equity firm.

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. The bid represents a 25 per cent premium over William Hill's closing price before the takeover interest emerged.

Caesars and William Hill have a US joint venture with 20 per cent and 80 per cent equity ownership respectively. The two were already in discussions about merging some of their operations in the US, 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.

Caesars' statement also outlined a potential break-up strategy. It said its focus would be on William Hill's US assets and it would "seek suitable partners or owners" for the other businesses such as the UK if its bid prevailed.

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William Hill's home market 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 US and online gambling.

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